Though we have few options to choose from when it comes to pumping gas in your vehicle in Nepal, there are actually more than 160 different internationally traded crude oils to choose from in the international platform. The characteristics, quality and price differentiate each and every type of oil. In this mini-series we will be focusing on two types of crude oil namely, West Texas Intermediate (WTI) and Brent Crude and their basis of differentiation. So is one better than other in terms of quality? Which one emerges as the winner in terms of price?  Read on to find out.

Many investors are interested in profiting from their views on the price of crude oil, but may not have considered that trading price differentials between different products. Investors have been provided with the option to either trade in WTI or Brent Crude Oil from 16^th May onwards on the MEX platform. The one we normally trade in is the WTI light crude oil, the oil entering the United States through the Gulf of Mexico. On the other hand, Brent Crude oil is the product which is located in the North Sea between Scotland and Norway, and is essentially the benchmark for the European Market.

WTI

WTI is a light crude oil, with an API gravity of around 39.6 and specific gravity of about 0.827, which is lighter than Brent crude. It contains about 0.24% sulfur and is thus rated as a sweet crude oil (having less than 0.5% sulfur), sweeter than Brent which has 0.37% sulfur. WTI is refined mostly in the Midwest and Gulf Coast regions in the U.S., since it is high quality fuel and is produced within the country.

Brent Crude

Also known as the Brent Blend, London Blend and Brent Petroleum, the Brent Crude is used to price two-thirds of the world’s internationally traded crude oil supplies. The petroleum production flowing towards the west from Europe, Africa and Middle East tends to be priced relative to this oil. Brent Crude has an API gravity of round 38.06, specific gravity of about 0.835. It contains approximately 0.37% of sulphur. Brent is suitable for production of gasoline and middle distillates. It is typically refined in Northwest Europe. It was originally traded in the open-outcry International Petroleum Exchange in London, but since 2005 has been traded on the electronic International Exchange, known as ICE.

We will be furnishing more details in regards to the price differentiation of WTI and Brent Crude in tomorrow’s blog.