Brent is a kind of light and low-sulfur crude oil, which is produced in Brent and Nigeria oil fields in the North Sea. At present, more than 65% of the world's real crude oil is priced by Brent system, which is the benchmark of global oil price.
West Texas intermediate crude oil
WTI crude oil is a light intermediate base crude oil from West Texas, USA, and the crude oil produced or sold in the United States is priced based on WTI.
Simply put, the difference between Brent crude oil and WTI crude oil is mainly manifested in these three aspects: influence, trading place and price.
1, Brent crude oil is more global representative, reflecting the global crude oil price, while WTI crude oil is mainly used in the United States, mainly reflecting the US crude oil price, with strong regional characteristics.
2. Both London Intercontinental Exchange and the New York Mercantile Exchange have Brent crude oil futures, while WTI crude oil futures are mainly traded on Chicago Stock Exchange.
3. The price of Brent crude oil mainly depends on the change of output and demand of the Organization of Petroleum Exporting Countries in Europe and Asia, while WTI crude oil is mainly affected by inventory.
In order to improve the effectiveness, liquidity and cost control of the spread trading between Brent crude oil and WTI crude oil, NYMEX set up a public quotation for Brent crude oil futures trading in Dublin trading hall, and traded on NYMEX ACCESS electronic system platform in the rest of the time. The public bidding time is from 10 to 7: 30 pm Dublin time, and the electronic trading time of NYMEX access system is from 8: 00 pm15 to 9:30 am Dublin time.
While improving the practicability of Brent crude oil futures contracts, the Exchange has launched trading platforms of automatic quotation, price report and price difference between Brent crude oil and WTI crude oil, respectively clearing Brent crude oil and light low-sulfur crude oil of NYMEX, which is an important development of the market, because arbitrage transactions in two different markets can be completed through this platform, and it will gradually become a liquid market with transparent price, competitive trading and simple operation.
The exchange believes that arbitrage trading is a kind of transaction, which allows operators to make full use of margin and effectively reduce transaction costs. When long positions offset short positions, the exchange thinks that arbitrage reduces market risk, especially the arbitrage of Brent crude oil futures and WTI crude oil, because these two futures contracts have good correlation, and the exchange provides 95% margin credit for one-to-one Brent /WTI arbitrage trading. The exchange also provided a cost control scheme for Brent crude oil futures contracts, which reduced a lot of operating expenses for market participants.
Brent crude oil futures contracts are settled in cash, with market data collected by Isilor, Argus and Reuters in Dublin as the index. Brent crude oil futures trading is cleared by the special clearing institution of the exchange, which ensures the safety of funds, among which neutrality, liquidity and market transparency have become the characteristics of NYMEX.