Brent crude oil markets strengthen, prompt DFL flips into positive territory (2024)

FAQs

Brent crude oil markets strengthen, prompt DFL flips into positive territory? ›

Brent crude oil markets strengthen, prompt DFL flips into positive territory. Brent crude oil markets strengthened across physical and paper markets, while the Dated to Frontline (DFL) swap contract moved into positive territory for the first time since January as Europe's maintenance season draws to a close.

Role in hedging

Hedgers could use a Crude Diff or 'Dated to Front Line' (DFL) contract, which is a spread contract between Dated Brent and Brent 1st Line Future (the front month future), to hedge the basis risk.

Brent crude fell by 2 cents to $79.29 a barrel by 0021 GMT, while U.S. West Texas Intermediate (WTI) crude fell 2 cents to $75.64.

The main fundamental drivers of the spread are: US crude oil production levels. Crude oil supply and demand balance in the US - i.e. crude oil inventory position in Cushing, PADD 2(mid-west) and PADD 3 (Gulf region) North Sea crude oil operations.

Key Points. The Brent benchmark is used to price over three-quarters of the world's traded oil, as one of the most liquid crude grades. The waterborne crude oil on which ICE's Brent benchmark is based has access to global shipping, port and storage capacity. It is processed by refiners around the world.

Barrels per day (B/D) is a measure of oil output, represented by the number of barrels of oil produced in a single day. For example, you might hear "country ABC has the potential to produce five million barrels per day." The abbreviation "bbl/d" can also be used to represent this production measure.

WTI Crude Oil is extracted from fields located in Texas, North Dakota, and Louisiana of the United States. Brent Crude is extracted from the North Sea near Europe; its oil fields include Brent, Ekofisk, Forties, and Oseberg.

Brent crude oil is expected to trade at 77.76 USD/BBL by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 85.24 in 12 months time.

Looking forward, we estimate it to trade at 85.24 in 12 months time. Brent Crude oil is a major benchmark price for purchases of oil worldwide.

As mentioned earlier in the article, Brent crude is the benchmark used for the wider light oil market – ie Europe, Africa and the Middle East, while WTI is the benchmark for the US light oil market.

Why is Brent always more expensive than WTI? ›

Another reason is that WTI supplies are produced in landlocked areas, and nowadays need to be transported to the coast, where most refineries are located. Because of growth in U.S. oil production, there's a glut of oil supply in the U.S. midwest. So WTI now trades at a price “discount” to Brent oil.

As the delivery date for WTI grew near, investors began a massive sell-off to take the contract off their hands, prompting an unprecedented crash into the negative territory. The historic drop quickly sent shock waves through the U.S. financial market.

Oil prices have surged after several of the world's largest exporters announced surprise cuts in production. The price of Brent crude oil is trading close to $85 a barrel after jumping by almost 6%.

Tapis, a type of crude found only in Malaysia, is considered the best quality oil in the world.

WTI or West Texas Intermediate is the other major global benchmark oil for price setting and is actually of better quality than Brent. It is extracted from wells in the United States and is considered to be a very sweet and very light crude oil.

Crude oil prices are determined by global supply and demand. Economic growth is one of the biggest factors affecting petroleum product—and therefore crude oil—demand. Growing economies increase demand for energy in general and especially for transporting goods and materials from producers to consumers.

One barrel of oil is generally deemed to have the same amount of energy content as 6,000 cubic feet of natural gas. So this quantity of natural gas is "equivalent" to one barrel of oil.

Deepest Subdivision Draught (ds) | Oil and Gas Drilling Glossary | IADCLexicon.org.

Barrel of oil equivalent (BOE) is the amount of energy contained in a barrel of crude oil, i.e., approximately 6.1 GJ (5.8 million Btu), equivalent to 1700kWh.

Brent becoming the new global benchmark is something we've seen coming for years — and we weren't the only ones with this foresight... The Saudis ditched WTI as a benchmark along with Kuwait back in 2009 for the heavier Argus Sour Crude Index (ASCI), based on the medium sour crude from the Gulf of Mexico.

Who buys oil from Russia? ›

Behind China and India, Turkey and Bulgaria are the biggest buyers of Russian crude. Even before Vladimir Putin launched his war on Ukraine, China was already a top buyer of Russian crude, importing 25% of its crude from the country in 2021. That's since climbed to 36%, Kpler data shows.

The company was operating on behalf of Royal Dutch Shell and ExxonMobil. In fact, Shell UK Exploration and Production originally named all its fields after birds. In this case, the bird was Brent Goose. Brent is also an acronym of Broom(oseBerg), Rannoch, Etive, Ness and Tarber – the formation layers of the oil field.

Brent crude oil price forecasts

Meanwhile, the ANZ WTI oil price forecast suggested the US oil to rise to $104 by the end of 2023, and stay at that level in 2024, averaging at $89 in 2023 and $104 in 2024.

Rising interest rates and the ongoing global economic slowdown have also impacted crude oil prices, despite the prospect of tighter supplies on OPEC+ supply cuts. Brent crude and US West Texas Intermediate crude were down on Monday, marking their first weekly drop in over a month.

World Oil Reserves

The world has proven reserves equivalent to 46.6 times its annual consumption levels. This means it has about 47 years of oil left (at current consumption levels and excluding unproven reserves).

It is predicted that we will run out of fossil fuels in this century. Oil can last up to 50 years, natural gas up to 53 years, and coal up to 114 years. Yet, renewable energy is not popular enough, so emptying our reserves can speed up.

WTI crude oil remains static around mid-$73.00s amid the early hours of Wednesday's Asian session, after portraying a four-day rebound from the lowest levels since December 2021. The black gold price portrays the market's cautious mood ahead of the key US inflation data.

Brent crude oil is a blended oil (a mix of brent, forties, oseberg and ekofisk) drilled from below the North Sea. It is popularly refined into diesel fuel and gasoline.

Due to its light and “sweet” nature, Brent Crude is preferred in refining oil to produce diesel, gasoline, and other end products. Brent Crude is used to price at least two-thirds of the world's traded crude oil supplies, making it one of the most important oil benchmarks.

Why is Canadian crude so cheap? ›

Western Canada Select almost always sells at a discount to WTI, because not all refineries are capable of handling it. It's generally seen to be of lower quality because of its high sulphur content, which makes it a "sour" blend, versus a "sweeter" blend like WTI.

Brent oil comes from the Scottish Brent and Ninian Systems located in the North Sea. This oil is also light and sweet, with an API gravity of 38.3.

We produce five different grades of crude oil. These are: Arabian Heavy, Arabian Medium, Arabian Light, Arabian Extra Light, and Arabian Super Light.

Taking into consideration the above-mentioned facts, you might be amazed to discover that the world's most expensive oil is Malaysian. Tapis, the Malaysian crude benchmark traded in Singapore, has for a long time held the title of the world's most expensive grade.

WTI is the main oil benchmark for North America as it is sourced from the United States, primarily from the Permian Basin.

US crude finished April 20, 2020, at minus-$37 a barrel, blowing past the zero mark that few imagined would ever be crossed. Negative oil is the equivalent of getting paid by your local Starbucks to take coffee off its hands. Nobody was driving.

Prices went negative — meaning that anyone trying to sell a barrel would have to pay a buyer $30 — in part because of the way oil is traded.

In the early 1980s, concurrent with the OPEC embargo, oil prices experienced a "rapid decline." In early 2007, the price of oil was US$50. In 1980, globally averaged prices "spiked" to US$107.27, and reached its all-time peak of US$147 in July 2008.

The agency, in its April Short-Term Energy Outlook, raised its 2023 Brent crude forecast by 2.5% to $85.01/b and its 2024 Brent forecast by 4.7% to $81.21/b. The EIA raised its 2023 WTI price outlook by 2.8% to average $79.24/b, and its 2024 WTI forecast by 5.1% to $75.21/b.

The production declines prompted some analysts to warn prices could surge to triple digits, with Goldman Sachs adjusting its Brent forecast up by $5 per barrel to $95 per barrel for December 2023.

Which country oil is richest in the world? ›

Venezuela has the largest amount of oil reserves in the world with more than 300 billion barrels in reserve. Saudi Arabia has the second-largest amount of oil reserves in the world with 297.5 billion barrels.

The best crude oil in the world is found in Malaysia.

If you are in Canada or the United States, that benchmark price is known as the West Texas Intermediate or WTI price. WTI is a light, sweet crude oil.

A large reason for these expensive prices is due to very strong demands, according to McTeague. “Post-COVID, economies are going to pick up. We use diesel for everything, from heating to fertilizer, all the way up to jet fuel,” he said.

Light Crude

Light crudes are primarily refined into gasoline, diesel and aviation fuels. The Newfoundland and Labrador offshore industry produces mainly light sweet crude that ranges in API gravity from about 20 to just over 40.

The Brent oil and gas field, lying north-east of the Shetland Islands, has been a cornerstone of the UK's hugely successful oil and gas industry for 40 years.

​Unlike most products, oil prices are not determined entirely by supply, demand, and market sentiment toward the physical product. Rather, supply, demand, and sentiment toward oil futures contracts, which are traded heavily by speculators, play a dominant role in price determination.

Saudi Arabia has the lowest oil production costs in the world thanks to two strategic advantages: Abundant pools of oil close to the surface and no taxes on production. Because of that, it can make money in almost any oil price environment.

Crude oil has historically been referred to as conventional crude, which is generally found deep underground by drilling. This crude typically has a density range of around 800 kg/m3 to 900 kg/m3 (80 per cent to 90 per cent that of water).

What is dated Brent to Frontline? ›

The Brent Dated to Frontline futures contract covers the price differential between the daily price of Platts Dated Brent and the futures settlement for the financial Brent futures contract for that day.

Depletion rates are set by the IRS and cover various natural resources. The most common rates are listed as follows: Oil and gas: 15% percent.

What is Dated Brent? Platts Dated Brent is a benchmark assessment by S&P Global Commodity Insights of the price of physical, light North Sea crude oil. The term "Dated Brent" refers to physical cargoes of crude oil in the North Sea that have been assigned specific delivery dates.

Heavy oil and bitumen are characterized by high-density, high-viscosity, and high-heavy fraction components. Table 12.2 shows that all heavy oil and bitumen produced in China has density >0.9 g/cm³ at 20°C. The density of the heavy oil in the Shanjiasi field is up to 0.9719 g/cm³.

Petroleum geologists categorize bitumen from oil sands as 'extra-heavy oil' due to its density of less than 10° API. Bitumen is the heaviest, thickest form of petroleum.

The density of most oils will range between 700 and 950 kilograms per cubic meter (kg/m3). In oils, it is usually indicated in the temperature of +15°C or +20°C, in units kg/m3. Water has a density of 1,000 kg/m3.

Brent WPI Spread is the difference in Brent Crude OIl Spot Price and WTI Crude Oil Spot Price. Brent Oil comes from the North Sea and is the major pricing benchmark for Atlantic basin oil.

The agency, in its April Short-Term Energy Outlook, raised its 2023 Brent crude forecast by 2.5% to $85.01/b and its 2024 Brent forecast by 4.7% to $81.21/b. The EIA raised its 2023 WTI price outlook by 2.8% to average $79.24/b, and its 2024 WTI forecast by 5.1% to $75.21/b.

The Brent field, operated by Shell, lies off the north-east coast of Scotland, midway between the Shetland Islands and Norway. It is one of the largest fields in the North Sea and is served by four large platforms – Alpha, Bravo, Charlie and Delta.

Venezuela has the largest amount of oil reserves in the world with more than 300 billion barrels in reserve. Saudi Arabia has the second-largest amount of oil reserves in the world with 297.5 billion barrels.

Has the world reached peak oil? ›

According to the International Energy Agency, production of conventional crude oil (as then defined) peaked in 2006, with an all-time maximum of 70 million barrels per day.

World Oil Reserves

The world has proven reserves equivalent to 46.6 times its annual consumption levels. This means it has about 47 years of oil left (at current consumption levels and excluding unproven reserves).

Looking forward, we estimate it to trade at 85.24 in 12 months time. Brent Crude oil is a major benchmark price for purchases of oil worldwide.

The Dow Jones Commodity Index Brent Crude is designed to track the Brent Crude market through futures contracts.