Why brent and wti

In contrast, West Texas Intermediate is produced in landlocked areas, making transportation costs more onerous. A surge of WTI production has led many traders to consider it an important pricing benchmark vs.

Brent, if not even close to the total production of the latter. The Organization of the Petroleum Exporting Countries OPEC controls most of the oil production and distribution, often dictating costs for not only oil suppliers but countries as well.

It is also slightly "sweeter" and "lighter" than Brent. Offshore oil rigs, despite being in the news more often, most famously with the BP oil leak of , are heavily traded as barometers of domestic oil market health. There has been a trend, due to advancements in oil drilling and fracking, of West Texas Intermediate becoming cheaper than Brent Crude oil.

The price of oil is a major factor in the overall health of the energy sector and is one of the most heavily traded commodities as it is influenced by almost every global, macro event. Another factor that can lead to significant differences between Brent Crude and West Texas Intermediate is geopolitical trouble.

West Texas Intermediate is less affected because it is based in landlocked areas in the United States. Energy Information Administration. Organization of the Petroleum Exporting Countries. The Council of Economic Advisers. Accessed Nov. Energy Trading. Actively scan device characteristics for identification.

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Select personalised ads. Economic and Financial Consulting and Expert Testimony. Search X. Battle of the Benchmarks: Brent Crude Oil and West Texas Intermediate This article examines the evolution and relationship between these two benchmarks and what factors have impacted their prominence as a benchmark. Authors Greg Leonard Nicole M. Moran Laurent Samuel The views expressed in this article are solely those of the authors, who are responsible for the content, and do not necessarily represent the views of Cornerstone Research.

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Geopolitics in the Middle East has been another driver of the spread; for example, the US withdrawal from the Iran nuclear deal, generally had a larger impact on Brent than on WTI. The continued increase in US crude oil output is a further factor that has impacted the spread between the two contracts. The main drivers of crude oil this year have been: OPEC supply cuts, which were extended in late , provided support for crude early in the year along with ongoing signs of improving global demand.

Geopolitical developments, such the US withdrawing from the Iran nuclear deal, have also provided a tailwind to crude oil. Source: Bloomberg, Abbey Capital Going forward, global trade, along with other geopolitical developments and the status of US production, remain potential drivers of crude oil prices.