The town of Cushing, Oklahoma is tiny, and if not for oil, would be unknown. But in , oil was discovered and the Cushing Oil Field roared into existence. The field is only 10 miles by 3 miles, but in , just three years after its discovery, it was producing more than two-thirds of oil in the Western Hemisphere.
Cushing was a major spot for oil for decades, and has been the delivery spot for contracts and price settlements for WTI for more than 30 years.
If we're going to be honest here, the fate of WTI was sealed years ago — and the latest proclamation that Brent crude has overtaken WTI as the global benchmark should be little more than an afterthought. The rise of Texas Tea started back in the early s, when the U. At the time, our domestic production was flowing at a rate of 8. What's more, it was some of the highest-quality crude that U. It also has a sulfur content around 0. Simply put, the preference for Brent crude today stems from the fact that it may be a better indicator of global oil prices.
Brent essentially draws its oil from more than a dozen oil fields located in the North Sea. It's also still considered a sweet crude, despite having a higher sulfur content than WTI.
Although most Brent is destined for European markets, it's already used as a price benchmark for other grades. There are a variety of platforms where the oils are traded depending upon your country of residence. One of the main way s to trade crude oil is through a futures contract, however there are differences for WTI and Brent. 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.
WTI futures trading hours :. Brent futures trading hours :. In the past, WTI traded at a premium to Brent. 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 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.
The chart below shows the price difference between WTI and Brent. Created by Abdullah AlAmoudi. See live WTI and Brent prices on our real time charts. Though we have listed the top five differences between WTI and Brent, these oils typically trade within a similar spread distance from one another.
There are times, however, when supply or demand constraints will significantly move one of the crude oils more than the other — such as tensions in the Middle-East or a natural disaster in North America, both of which could shut down extraction or refining ability of Brent and WTI, respectively. The key take away for traders is to keep an eye on crude oil news and monitor the spread between the two crude oils.
A change in the spread may indicate a change to the supply or demand of one of the oils, which is important knowledge to be able to trade those changes accordingly. Not as sensitive to geopolitics. Difference in price and benchmark. Trades at a discount to Brent. At DailyFX we have many resources to help you improve your trading:. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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East Coast, putting downward pressure on the price of Brent crude oil and narrowing the differential versus WTI crude oil. The future of the Brent-WTI price spread will be determined, in part, by the balance between future growth in U. Add us to your site. Risk Factors: This brief statement cannot disclose all of the risks and other factors necessary to evaluate a participation in a fund managed by Abbey Capital.
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