When trading oil as a commodity, you'll frequently encounter two major oil benchmarks: WTI and Brent Crude. Understanding the differences between these two oil types is essential for making informed trading decisions.
Origin and Production Locations
WTI (West Texas Intermediate):
Sourced primarily from oil fields in the United States
Extracted mainly from wells in Texas, Louisiana, and North Dakota
Serves as the benchmark for US-produced crude oil
Brent Crude:
Extracted from oil fields in the North Sea
Named after the Brent oil field, originally discovered by Shell
Serves as the international benchmark for crude oil pricing
Physical Properties
WTI:
Classified as "light sweet crude oil"
Lower sulfur content (0.24%)
API gravity of around 39.6° (lighter)
Easier and less expensive to refine into gasoline and diesel
Brent:
Also classified as "light sweet crude oil" but slightly heavier than WTI
Slightly higher sulfur content (0.37%)
API gravity of around 38.3°
Still relatively easy to refine compared to heavier crude varieties
Price Determinants
WTI Price Factors:
US oil production levels
US storage capacity (particularly at Cushing, Oklahoma)
North American pipeline capacity
US domestic consumption patterns
Brent Price Factors:
Global supply and demand dynamics
Political stability in Middle East and other major producing regions
OPEC production decisions
International shipping and transportation costs
Trading Considerations
WTI and Brent products offered by FXTRADING.com are CFDs, not exchange-traded oil futures. Their prices may reference underlying oil futures markets. Availability depends on your account and platform; a CFD gives no ownership of physical oil or a futures contract.
Contract Specifications: The contract sizes, margin requirements, and trading conditions may differ between WTI and Brent. Always review the current specifications before opening positions.
Market Influence: While WTI is more reflective of the US market conditions, Brent is generally considered more representative of global oil prices. Approximately two-thirds of global oil contracts reference Brent prices.
Historical Price Relationship
Historically, WTI and Brent traded at similar prices, with WTI occasionally commanding a small premium due to its higher quality. However, since 2011, structural changes in oil transportation infrastructure and regional production dynamics have led to periods where Brent trades at a premium to WTI.
Check the symbol's current conditions in Web Trader Information or the MT4/MT5 Specification before trading.