WTI and Brent contracts

[LS04]

Can anybody tell me why Brent crude sells for such a premium to West Texas Int. ?.
Is the sulphar content and S.G. that much better. There was an anlayst on TV saying that the real price of oil is the Brent contacts and WTI is “cheap” by comparison
T.I.A.

[Nametag]

No, they’re both worse. You can’t just move price-equalizing amounts of crude around that easily, so the current supply/demand curve for Brent breaks even at a higher price than for WTI at Cushing, OK. From Wikipedia:

Anomaly in 2007

WTI usually commands a higher price than Brent crude does, but on May 24, 2007, WTI was priced at $63.58 per barrel as against $71.39 per barrel for Brent (Bloomberg). The anomaly occurred perhaps because of a temporary shortage of refining capacity. On April 13, WTI Crude at Cushing may have temporarily lost its status as a barometer of world oil prices.[1] A large stockpile of oil at the Cushing, Oklahoma storage and pricing facility (mainly due to a refinery shutdown[2]) caused price to be artificially depressed at the Cushing pricing point. As stockpiles decreased, the WTI price increased to exceed the price of Brent once again.[3]
Anomaly in 2011

In Feb. 2011, WTI was trading around $85/barrel while Brent was at $103/barrel. The reason that most cite for this anomaly is that Cushing has reached capacity, depressing the oil market in North America which is centered on the WTI price. However, Brent is moving up in reaction to civil unrest in Egypt and across the Middle East. Since stockpiles at Cushing cannot be easily transported to the Gulf Coast for export, WTI crude is unable to be arbitraged in bringing the two back into parity.

[LS04]

So its the price one pays in Europe as opposed to the US. Its interesting that Nat Gas
is so cheap here 3.9 per mmcf as opposed to 12 to 13 mmcf in other parts of the world that suppliers cant tae advantage of that price spread. Than you for answer.

[Implicit]

@LS04

So its the price one pays in Europe as opposed to the US.

Yes, crude oil price is quoted at the oil producing country’s port of loading (F.O.B. is the term).

[LS04]

Ive always been interested in the Oil and Gas markets, its quite fascinating the way these commodities trade. The market for Electrical Power is also interesting and one of the few things that a retail investor can not get involved in.