WTI CRUDE

Uncensored2008 said:
How does WTI differ from Brent? What I've read is that the USA and most of Europe uses Brent grade oil. Forgive my ignorance on this.
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They are benchmarks. The grade is arbitrary, but the locations are important.

There are about 200 different grades, and 2,000 different locations that oil is bought and sold(we are not even touching the 180 different currencies), so oil might seem a lot less fungible than is often claimed. That being said, the prices of different grades move in tandem, so if we have benchmarks in different parts of the world, we can make the oil market fungible. For a contract in the future for a given grade and location, it is quoted as a static numbers of dollars off of a benchmark. So sour oil delivered to Florida in 3 months might be $5 cheaper than whatever the WTI is in 3 months. Both buyer and seller will know that price will adjust to whatever the market says.

Differences in prices of grades barely change over the short to medium term, but difference in geographic prices can radically change over the short term. If there is an oil shortage in Europe, then in Brent will go up immediately, but, in the short term, WTI might not. Over time, oil will flow to where it is needed, so Brent and WTI will average out(in theory). That takes time.

FastLane said:
They are both sweet oils
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Absolutely no one cares what grade they are. If another benchmark grade was picked, it would work just as well.

Uncensored2008 said:
It was the Gulf of Cortés until the mid-19th century
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Actually, it was most commonly called the Gulf of Mexico by the mid-17th century. That is over a hundred years before the USA, or Mexico existed.
 
Into the Night said:
Nope. A single person can name an ocean.

Yes it does. It changes our maps.
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Yes, a single person can rename (or name) anything. However, the point of language is communication. If I refer to the Gulf of Mexico as the Gulf of Chris, I am welcome to do so. But no one else will know what I am talking about.

It is the Gulf of Mexico.
 
Walt said:
They are benchmarks. The grade is arbitrary, but the locations are important.

There are about 200 different grades, and 2,000 different locations that oil is bought and sold(we are not even touching the 180 different currencies), so oil might seem a lot less fungible than is often claimed. That being said, the prices of different grades move in tandem, so if we have benchmarks in different parts of the world, we can make the oil market fungible. For a contract in the future for a given grade and location, it is quoted as a static numbers of dollars off of a benchmark. So sour oil delivered to Florida in 3 months might be $5 cheaper than whatever the WTI is in 3 months. Both buyer and seller will know that price will adjust to whatever the market says.

Differences in prices of grades barely change over the short to medium term, but difference in geographic prices can radically change over the short term. If there is an oil shortage in Europe, then in Brent will go up immediately, but, in the short term, WTI might not. Over time, oil will flow to where it is needed, so Brent and WTI will average out(in theory). That takes time.


Absolutely no one cares what grade they are. If another benchmark grade was picked, it would work just as well.


Actually, it was most commonly called the Gulf of Mexico by the mid-17th century. That is over a hundred years before the USA, or Mexico existed.
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They are bench marks BECAUSE OF THE GRADE you moron.
 
WinterBorn said:
Yes, a single person can rename (or name) anything. However, the point of language is communication. If I refer to the Gulf of Mexico as the Gulf of Chris, I am welcome to do so. But no one else will know what I am talking about.

It is the Gulf of Mexico.
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Then don't call it the Gulf of Chris. It is the Gulf of America. That is what is on the maps. There is no Gulf of Mexico.
 
FastLane said:
They are bench marks BECAUSE OF THE GRADE you moron.
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If another grade was the benchmark, we would just use that as the benchmark. If a sour grade is $3 below WTI, and you make the sour grade the benchmark, then WTI is $3 above the benchmark.

Is crude oil shipped in barrels? Of course not, but the benchmark became a barrel, which is still used today.
 
Hawkeye10 said:
In the real world each refinery is set up for a particular type of crude, and it makes particular products.
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the larger complete refineries are setup to produce nearly everything their companies sell, from bar chain oil to grease to gasoline. Some companies specialize, like Castrol in Louisiana, but they do blends and hold patents on specialty oils and are not a fill refinery; they buy their base stocks from the large refineries. There are also refineries that are set up to run other companies' blends of gasoline. For instance, there is one in Ft. Worth that can run batches of Shell, Exxon, Phillips, Sinclair, and several other companies patented blends. They pay a royalty on which particular blend they run. They serve mainly convenience stores.
 
Steinbeck said:
Yes. A refinery that can handle sour crude, and the much dirtier Canadian sludge, can easily handle the sweeter crudes.
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The reverse is not true......and I think I know that it is possible to make a lot more diesel with sour and that is not the only thing for which the input matters.......one decides what to feed a refinery in part by deciding what end products are wanted.
 
Uncensored2008 said:
How does WTI differ from Brent? What I've read is that the USA and most of Europe uses Brent grade oil. Forgive my ignorance on this.
Click to expand...

There is a wide variety in crude oils re chemical compositions. these differences affect yields of different products. Some yield a higher percentage of, say, gasoline, others yield high grades of lubricants, i.e. heavier grades.
 
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