Brent is the core of the global crude oil pricing system, and about 55% of international oil trade is based on the price generated in Brent market system directly or indirectly. At present, the Brent crude oil we are talking about includes four kinds, namely Brent mixed oil (Brent and Nignan), Forties, Oseberg and Ekofisk, or BFOE for short. All these crude oil transactions are used to evaluate the Brent benchmark price and can be used for forward contract delivery, which greatly expands the output of Brent benchmark crude oil, that is, the spot base of the market, expands the number and diversity of producers, traders and consumers in the market, and is conducive to strengthening the trade activity of BFOE and consolidating its benchmark role in the North Sea and even the global crude oil trade.
Brent benchmark market is not a single market, but includes a series of complex market levels, among which the most important markets are BrentForwards, DatedBrent, CFD, futures options, swaps and so on. Some of these markets are futures options markets traded on exchanges, while most of them are over-the-counter markets. They exist independently of each other, but they are closely linked and complement each other. * * * isomorphism forms Brent benchmark market system, which determines the price formation and discovery process in this system. The prices generated in these markets are also isomorphic with Brent benchmark price system.
Among them, the forward market was first formed in Brent benchmark market system. Brent futures is essentially a forward goods contract. The buyer and the seller have determined the transaction volume, transaction price and delivery month, but the specific shipment date of the goods has not been determined, so the buyer needs to inform the seller a certain number of days in advance before shipment. Due to the huge contract scale (i.e. goods) involved in Brent forward contract, the transaction is highly professional, and only a few large international oil companies or large traders participate. Brent spot spot transaction: after the buyer and seller agree on the transaction scale and price, physical delivery is rarely carried out immediately, and usually the transaction scale and price are agreed at least 10 days before delivery. Therefore, Brent spot trading is often simply regarded as spot trading corresponding to forward and futures trading, but it actually contains certain "forward" factors, which brings certain price risks to both parties. Since 1990s, the price of Brent spot trading is usually set in the form of Brent forward price plus price difference, that is, premium, rather than independent price. This spread itself has evolved into an important OTC swap contract and an important part of Brent benchmark market system.
WTI is the largest crude oil futures product in the world. In view of the important position of the United States in the global economic and financial markets and its position as the world's largest crude oil consumer, WTI has an increasing influence on the global crude oil market. WTI crude oil futures are delivered in Cushing, Oklahoma. With the surge of shale oil production in the United States, the market pays more attention to the price difference between LLS and WTI crude oil in the Gulf of Mexico, which is directly related to the rise and fall of Cushing's inventory.