Oil can be sweet or sour, and light, medium or heavy. But the best kind is sweet and light. Sweet oil is low in sulfur; light oil can float on water. Put the two together and you get oil that needs little processing.
And that takes us to WTI (West Texas Intermediate), Brent and the price of oil.
WTI and Brent
Global benchmarks, WTI and Brent are both sweet and light. WTI, though, is U.S. oil while Brent (North Sea) comes from Europe. You can see below that typically, though not always, if you asked about the price of oil, WTI or Brent would have conveyed similar information.
As benchmarks, they matter. Let’s say you have some sour medium oil. A trader could ask, what is the price of Brent and then move down from there to determine the value of the lower quality oil he is evaluating. In one article, an analyst just said, “I’ll give you Brent minus $2.50.
The Price of Oil
U.S. oil production far exceeded projections:
U.S. Oil Supply
OPEC and Non-OPEC Oil Production
Meanwhile as world GDPs slip…
World oil demand also drops:
Global Oil Demand
Also, biofuel production is rising.
Global Production of Biofuels
And, global energy use is less oil centered.
Oil Intensity of Energy Consumption and GDP