For a practical reason, Oil is considered among the top frequently traded commodities globally.
Oil can also collapse the economies as it is a consistent part of politics. There are many variants of petroleum, among which BRENT and WTI are the biggest sellers. For better knowledge, let’s differentiate Crude Oil and WTI, where precise trading decisions can be made.
WTI vs. Brent
The difference between Brent crude and WTI crude Oil is that WTI originates from U.S. oil fields, and Brent Crude originates from oil fields in the North Sea. Usually, WTI is slightly “sweeter,” “lighter,” and lower in price than Brent.
Differences are:
- Location of Extraction
- Geopolitical Scenarios
- Benchmark and Prices
- Trading Platforms for WTI and Brent crude
- Composition and Content
1. Location Of Extraction
WTI (Western Texas Intermediate)
WTI is extracted from the oil fields in the USA. First, it is extracted in North Dakota, Texas, and Louisiana, and later, it is conveyed to Oklahoma, Cushing, by pipeline.
Technological upgradation during the early 2000s made it possible to extract Oil from sedimentary rock, which was nearly inaccessible then. As a result, it boosted the USA’s oil-producing capacity, which in turn denominated the Shale Revolution.
Crude Oil is extracted from oil fields in the North Sea. ‘Brent Crude’ combines four natural O.I.s, the Fort’es, Brent, Ekofisk, and Osberg, designated as BFOE.
2. Geopolitical Scenarios
Geopolitical prompt: The unstable political structure of oil-producing nations and OPEC’s ascending and descending levels of crude production affect oil prices on a large scale. Traders must understand the difference between Brent oil and WTI.
The world’s major oil-producing countries, except the U.S., depend on the world’s Oil to harmonize the economy. Unfortunately, the political structure of these nations was quite inconsistent, which inflated oil prices—specifically, Brent crude. Hence, oil production is challenged.
Out of the list, many nations are part of the OPEC (Organization of the Petroleum Exporting Countries). Venezuela, Iraq, Iran, Nigeria, and Saudi Arabia are significant representatives. A compelling part of their nation’s income is achieved from Brent Crude itself. The primary goal of OPEC is to ensure stable rates despite a surge or drop in its representatives’ oil production capacity.
When we talk about representative crude Oil, crude oil dealers are the ones to watch for rising pressure in the Middle Eastern continent of Asia, as it is a tremendous global producer of crude Oil. Due to Geopolitical tension, the market can experience a Sudden or gradual loss in the supply of Crude Oil, which, on the other hand, can cause sensitive price movement.
Meanwhile, supply and demand factors will be supervised by the WTI dealers in the United States. Suppose any interruption is experienced to either WTI crude or Brent crude. In that case, it can cause the spreading change to Brent-WTI, giving another reason to either market to act combatively compared to others.
3. Benchmark and Prices For Brent Oil and WTI
Previously, WTI was superior to Brent in terms of trading. However, after the Shell Revolution, which took place in the early 2000s ( when the production of WTI increased) and more quantity was supplied from Canada to the U.S., the value of WTI reduced. However, It is now traded at an economical cost compared to Brent.
Currently, in the U.S., WTI is the benchmark for oil rates, whereas Brent is the global benchmark because nearly two-thirds of all oil contracts are made with Brent.
General rate variations between WTI and Brent are acknowledged as WTI vs. Brent Spread. There will be a change in spread after every specific time interval because the supplies and requirements of all the crude Oil are directly proportional to regulations, geopolitics, and weather.
4. Trading Platforms for Brent and WTI
Depending on your country of residence, we have several places to trade Crude Oil. Perhaps the best way to deal with Brent crude is via future contracts, but to be more precise, there can be differences between Brent crude and WTI.
NYMEX (New York Mercantile Exchange) deals with WTI futures contracts and is owned by CME (Chicago Mercantile Group). Oklahoma, Cushing has the output for other WTI agreements. Cushing is facilitated with a transmitting point. Also, bisecting conduits and storehouses with friendly admittance to refiners and suppliers are provided.
ICE (Intercontinental Exchange) in the capital of England holds the authority to trade Brent futures contracts.
The Specific details for Brent and WTI are as follows:
| BRENT | WTI | |
| Priced in | U.S. Dollars and Cents | U.S. Dollars and Cents |
| Contract Size | 1,000 barrels | 1,000 barrels |
| Ticker Symbol | BZ | SCL |
| Deliverable | YES | YES |
Official trading times for Brent and WTI also differ.
Trading Hours for WTI Futures
Sunday-Friday 1700hrs to 1600hrs as per C.T. (Chicago Time) accompanied by a sixty-minute respite each day commencing at 1600hrs C.T.
Brent Futures Trading Hours:
Sunday-Friday from 1900hrs to 1700hrs C.T. the other day.
5. Brent and WTI: Content and Composition
The sulfur content and API gravity of Brent and WTI are very different, and they are proportional to the prices of the oils.
While the Sulfur content in WTI is 0.24%, the amount of sulpSulphurBrent is 0.37%. The lower sulfur oil content proves to be more candied and uncomplicated to refine. As a result, both Brent and WTI are pleasant crude.
Oil’s gravity is rated on a scale of 10 to 70, and according to Oil’s scale, the higher the number, the less dense the Oil. So, to be more precise, if the Oil’s API is higher than 10, the Oil will hover on the surface oil, and if it is lower than 10, the Oil will go down. Therefore, both Crude Oil and Brent are comparatively light oils.
| Brent | WTI | |
| Content of Sulphur | 0.37% | 0.24% |
| API Gravity | 38 | 39.6 |
Traders would like to monitor the variation in the supplies and requirements cycle. For instance, as per the IMO 2020 Act, the demand for light and pleasant crude may increase, so demand for WTI and Brent may rise.
Brent vs. WTI: Summary
Despite listing the five most effective differences between Brent crude and WTI, a classic trade of these oils happens within a standard spreading interval between each other. Sometimes, when the limitations of supplies and requirements move either petroleum longer concerning another – similar issues in the Middle Eastern continent of Asia or force majeure in Northern America, two of them can result in abandoning eradication or cultivation activity of WTI and Brent crude, one after another.
Glancing at Brent crude reports and supervising the spread between Brent crude and WTI generates the most valuable data for traders. A change in the spread can result in variations in supplies and requirements of any oil; this data proves to be precious as it enables you to deal with those variations proportionately.
| Brent | WTI | |
| Extracting Location | North Sea | North America |
| Geopolitical Scenarios | More sensitive | Comparatively less sensitive |
| Benchmark and Prices | More premium than WTI | Trades comparatively cheaper |
| Trading Platforms | ICE | NYMEX |
| Content and composition | 0.37% SulpSulphur API | 0.24% SulpSulphur.60 API |
After leaving Wells Fargo Bank in 2014, Daniel began a career as a finance consultant, advising companies and individuals on economic policy, labor relations, and financial management.
At Promtfinance.com, Daniel writes about personal finance topics, value estimation, budgeting strategies, retirement planning, and portfolio diversification.
Read more on Daniel Smith's biography page.
Contact Daniel: daniel@promtfinance.com