قالب وردپرس درنا توس
Home / Business / Why WTI is a global benchmark for the oil market

Why WTI is a global benchmark for the oil market



The oil markets are global and therefore oil prices around the world are generally in parallel. Oil prices vary in terms of quality and geography, but the fungible nature of oil usually prevents certain benchmarks from deviating too far from other benchmarks.

In the US, we know the West Texas Intermediate (WTI) benchmark and the internationally traded Brent crude. WTI is of lower quality than Brent, and by about 2006, WTI was almost always trading at $ 1 a barrel over Brent.

In 2007, this WTI premium became a WTI discount that rose to over $ 10 / yr. Barrel from 2010 to 2013.

(Click to Enlarge)

WTI and Brent Awards 1987 to 2017

What happened in those years? The US government imposed a ban on crude oil exports so that the shale oil boom caused the US to suddenly and unexpectedly be submerged in crude oil.

US. Refineries could refine this oil and export finished products – which they did. However, domestic refineries had invested billions to process imported crude oils that became heavier and more acidic. Because of the investments made in the processing of this oil, the economy favored heavy sour crudes over the light, sweet crude from the shale oil games.

Although crude oil is traded globally, this is the case of crude oil export prohibition due to oil production, and WTI was actually a more localized market (similar to natural gas in the US). The refineries had plenty of crude oil, which was not the ideal quality for them. There were also logistical constraints to bringing some of the new production to refineries. This is how the WTI discount developed.

In December 2015, President Obama signed a $ 1.15 trillion spending bill that allowed renewable energy producers a series of concessions to lift the lifting of the oil export ban. Refineries have worked hard to preserve the export ban, while crude oil producers have campaigned for the lifting of the export ban. Related topics: Could this material kill lithium-ion batteries?

It was not long before the repeal had effect. By 2015, crude oil exports to Canada – exempted from the ban – had risen. There were also a small number of exports to other countries that were allowed on a case-by-case basis.

After 2015, the list of destinations for US crude oil exports exploded. Canada was the target for 92 percent of US exports in 2015. By 2018, the Canadian share had fallen to 20 percent. At the same time, the amount of exported crude rose from less than half a million barrels a day to over two million barrels a day.

(Click to Enlarge)

US Crude Oil Exports 2000 to 2018

The number of countries importing US crude expanded to nearly three dozen. China briefly outperformed Canada as the top destination for crude oil exports in the US. China imported more than half a million barrels of US crude oil daily last summer, before concerns over the trade war led to cuts in US oil imports.

However, the overall impact of increased US WTI exports had resulted in a discount on Brent's development. After 2013, the discount went down for four consecutive years. By 2016, the discount was almost completely gone, leaving WTI trading again in line with international benchmarks.

I believe the development of the WTI market can guide our expectations of the growing US liquefied natural gas (LNG) export market. I will cover this topic in the next article.

By Robert Rapier

Other top readings from Oilprice.com: [19659020(!!function(f,b,e,v,n,t,s) {if (f.fbq) return; n = f.fbq = Funktion () {n.callMethod?
n.callMethod.apply (n, Argumente): n.queue.push (Argumente)}; if (! f._fbq) f._fbq = n;
n.push = n; n.loaded =! 0; n.version = '2.0'; n.queue = []; t = b.createElement (e); t.async =! 0;
t.src = v; s = b.getElementsByTagName (s) [0]; s.ParentNode.insertBefore (t, s)} (window,
Document, & # 39; script & # 39 ;, & # 39; https: //connect.facebook.net/en_US/fbevents.js');

fbq ("init", "287597818242477");
fbq (& # 39; track & # 39 ;, "PageView");
Source link