Brent Crude Dec 2018

Last year, after Hurricane Harvey closed one quarter of the refining capacity of the United States and demand for crude oil shrank, US crude oil began trading at a lower price than international standard Brent crude. This discount helps to make US crude more attractive to overseas refiners and to boost US exports to the past 2,000,000 barrels last fall. In the United States, coal-fired power generation and coal production are expected to continue to decline by 2022 as power plants continue to retire due to pressure from natural gas power generation. According to the Environmental Impact Assessment, almost all new power generation in the United States will be done from 2022 onwards from natural gas power plants, renewable energy sources such as wind power generation and solar farms.

Brent and WTI are the two major trading categories of crude oil and are the two major benchmarks of global oil price setting, but in recent years Brent has been increasingly selected as a benchmark. According to ICE futures, it is estimated that 60% of crude oil traded worldwide is cheaper than Brent crude. Before explaining the importance of Brent and WTI to the futures market, you should look at the difference between them. Although Brent originally referred to oil extracted from the Brent oil field in the North Sea off the coast of England, for various reasons it refers to four different crude oil grades extracted from various wells in the North Sea - a mixture with Osberg Ekofisk (aka BFOE). Mixing these four types of oil actually makes Brent oil heavier, but it is still considered to be relatively lightweight and low in sulfur content.