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On April 26, according to the Wall Street Journal, in order to simplify the negotiations on reciprocal tariffs, US negotiating officials plan to use a new framework developed by the Office of the United States Trade Representative (USTR), which lists major categories of negotiations, such as tariffs and quotas, non-tariff trade barriers, digital trade, product origin principles, economic security and other commercial issues. In these categories, US officials will put forward specific requirements for individual countries, but people familiar with the matter emphasized that this document may also be adjusted at any time. People familiar with the matter said that the United States initial plan is to negotiate with 18 major trading partners in turn over the next two months. The initial plan is to alternately participate in the talks with six countries per week for three weeks (six countries in the first week, another six countries in the second week, and another six countries in the third week) until the deadline of July 8. If US President Trump does not extend the 90-day suspension period he set by then, those countries that cannot reach an agreement will begin to face reciprocal tariffs.On April 26, after the United States announced additional tariffs on goods from many countries, Peruvian business people expressed concerns that the US governments extreme measures would disrupt the global trade order and may even trigger a global economic recession. Alvaro Barrenechea Chavez, vice president of the Peruvian-Chinese Chamber of Commerce, said that the negative impact of the US tariff policy has begun to emerge and hoped that the US government would rethink. Recognizing the importance of countries working together to promote development, I think this is the best way to become a true "world citizen."Market news: Musks xAI company plans to raise about US$20 billion in a financing round.Conflict situation: 1. Ukrainian top commander: Russia tried to use air strikes as a cover to increase ground attacks, but was repelled by Ukraine. 2. Ukrainian Air Force: Russia launched more than 103 drones in the night attack on Ukraine. 3. Local officials said Ukraine launched an attack in the Belgorod region of Russia, killing two people. 4. The local governor said that Russia launched an attack on the Dnipropetrovsk region of Ukraine, killing one person and injuring eight people. Peace talks: 1. Trump: ① The situation between Russia and Ukraine is gradually becoming clear, and they are "very close" to reaching an agreement. ② Ukraine is unlikely to join NATO. ③ Ukraine has not yet signed the rare earth agreement and hopes that the agreement can be signed immediately. ④ It is foreseeable that the United States will conduct commercial cooperation with Ukraine and Russia after reaching an agreement. 2. Russian Foreign Minister: Russia is "ready to reach an agreement on Ukraine." 3. Russian Presidential Assistant Ushakov: Russia and the United States will continue to maintain active dialogue. 4. Russian Presidential Assistant: Putin discussed the possibility of resuming direct negotiations between Russia and Ukraine with the US envoy. 5. The differences between the United States, Europe and Ukraine are clear. The documents show that European countries and Ukraine have raised objections to some of the US proposals to end the Russia-Ukraine conflict. 6. Market news: As part of the peace agreement, the United States asked Russian President Putin to abandon the demilitarization requirement. Other situations: 1. President of Hungarys OTP Bank: We hope to return to all business areas in Russia after the (Russia-Ukraine) conflict ends. 2. Ukrainian President Zelensky: US ground forces are not necessary for Ukraine. 3. Trump said Crimea will remain in Russia, Zelensky: Never recognize it. Agreeing with Trumps view, Crimea cannot be recovered by force. 4. NATO Secretary-General Rutte met with Trump and senior US officials to discuss defense spending, NATO summit, and the Ukrainian conflict.Rising global trade risks, overall policy uncertainty and the sustainability of U.S. debt top the list of potential risks to the U.S. financial system, according to the Federal Reserves latest financial stability report released on Friday. This is the first time the Fed has conducted a semi-annual survey on financial risks since Trump returned to the White House. 73% of respondents said that global trade risks are their biggest concern, more than double the proportion reported in November. Half of the respondents believe that overall policy uncertainty is the most worrying issue, an increase from the same period last year. The survey also found that issues related to recent market turmoil have received more attention, with 27% of respondents worried about the functioning of the U.S. Treasury market, up from 17% last fall. Foreign withdrawals from U.S. assets and the value of the dollar have also risen on the list of concerns.

WTI vs Brent: Top 5 Differences Between WTI and Brent Crude Oil

Alyssa Hertig

Oct 25, 2021 13:27

Oil is one of the most actively traded commodities in the world,it also knows as 'petroleum or crude oil' or more popularly known as 'Black Gold' in the modern world. Generally speaking, price fluctuation of crude oil closely related to political events and the economy. 

 

Top five crude oil-producing countries,1980-2019

排名前五的石油生产国.png

Photo: EIA

 

Two of the most commonly traded types of crude oil are West Texas Intermediate (WTI) and Brent Crude. There are five main differences between WTI and Brent:

 

1.EXTRACTION LOCATION


WTI is extracted from wells in the U.S. It is primarily extracted in Texas, Louisiana, and North Dakota and is then transported via pipeline to Cushing, Oklahoma for delivery. The fact that supplies are land-locked is one of the drawbacks to West Texas crude as it’s relatively expensive to ship to certain parts of the globe. The product itself is very light and very sweet, making it ideal for gasoline refining, in particular. WTI continues to be the main benchmark for oil consumed in the United States.

 

U.S crude oil production by state 2019

美国产油州的数量.png

Photo: EIA

 

These days, “Brent” actually refers to oil from four different fields in the North Sea: Brent, Forties, Oseberg, and Ekofisk, which together are known as BFOE. Crude from this region is light and sweet, making them ideal for the refining of diesel fuel, gasoline, and other high-demand products. And because the supply is waterborne, it’s easy to transport to distant locations.

 

2. CONTENT AND COMPOSITION OF WTI AND BRENT


Brent and WTI have very different sulfur content and API gravity, which can directly affect the price of the oils.

 

While WTI has a sulfur content of 0.24%, Brent has a sulfur content of 0.37%. The lower the sulfur content of the oils the ‘sweeter’ the oil and the easier it is to refine. Both WTI and Brent are considered sweet crude.

 

The gravity of the oils is rated on a scale from 10 to 70, where the higher the number the less dense the oil. To put this in perspective, if the API is higher than 10 the oil will float on water, and if it is lower than 10 the oil will sink. Both Brent and Crude are relatively light oils.

 

On 1 January 2020, the International Maritime Organization (IMO) implemented a new regulation for a 0.50% global sulphur cap for marine fuels. Under the new global cap, ships will have to use marine fuels with a sulphur content of no more than 0.50%S against the current limit of 3.50%S to reduce the amount of sulphur oxide. The Emission Control Areas (ECAs) will remain at the 2015 standard of 0.1%S content.

 

3.DIFFERENCE BETWEEN WTI AND BRENT PRICES


In the past, WTI traded at a premium to Brent. However, due to the Shale Revolution in the early 2000s (in which WTI production increased) and more imports to the US from Canada, the price of WTI declined. It now usually trades at a discount to Brent.

 

Today WTI is the benchmark for oil prices in the US, while the rest of the world - and nearly two-thirds of all oil contracts traded - are on Brent. This makes Brent the global Benchmark.

 

The price difference between WTI and Brent is known as the WTI vs Brent Spread. The spread will change from time to time, as the supply and demand forces of each crude oil are elastic due to geopolitics, weather, and regulation.

brent wti价格差别.png 

Photo: EIA

 

4. DIFFERENCE BETWEEN TRADING LOCATION AND TIME


WTI futures contracts are traded on the New York Mercantile Exchange (NYMEX), which is owned by the Chicago Mercantile Group (CME). WTI futures contracts are deliverable in Cushing, Oklahoma. Cushing is a transshipment point with intersecting pipelines and storage facilities that has easy access to refiners and suppliers.

 

Brent futures contracts are traded on the Intercontinental Exchange (ICE) in London.

不同合约地点英文版.png 

Photo: Internet


WTI futures trading hours:

Sunday-Friday 5:00 pm to 4:00 pm Chicago Time (CT) with a 60min break each day starting at 4:00 pm CT.


Brent futures trading hours:

Sunday-Friday from 7:00 pm to 5:00 pm CT the next day.


5. GEOPOLITICAL DIFFERENCE BETWEEN WTI AND BRENT

Geopolitical influences - such as volatile political systems of oil-producing countries, and OPEC’s rising and falling oil production levels - can have a big impact on oil prices. Traders should know how these vary for WTI and Brent.

 

Roughly two-thirds of all crude contracts around the world reference Brent Crude, making it the most widely used marker of all. Many oil-producing countries in the world rely on oil exports to balance their fiscal budgets, such as Saudi Arabia, Iran, and Iraq. The political systems of these oil-producing countries are usually relatively unstable, which has a great impact on Brent crude oil, so trading Investors in Brent crude should pay more attention to the development of the situation in the Middle East.

 

WTI oil traders, similarly, will be monitoring the supply and demand factors in the U.S. Disruptions to either Brent crude or WTI crude could cause the WTI-Brent to spread to change causing one of the markets to move more aggressively relative to the other.

 

Although there are many profit-making opportunities in the crude oil market, it is also full of greater investment risks. By investing you're taking a risk, and you have to be ready for both outcomes.