What Is Oil Trading (WTI and Brent)

Oil trading, in five lines

The unit is a barrel, 159 litres, and the price is dollars per barrel, 70.00 as a round example rate, since this library holds no oil bars. There are two barrels to choose from: WTI, American oil priced at a tank farm in Texas, and Brent, North Sea oil priced in London, listed on platforms as USOIL and UKOIL or similar names, as CFDs on the futures price, where a CFD is a contract on the price difference rather than the oil itself. One lot is 1,000 barrels at most brokers, 70,000 dollars at the example rate, so a cent of price is 10 dollars at one lot. The catch is that the futures underneath expire every month, and the CFD rolls to the next month with an adjustment.

A rig and a tank farm

Picture the two places the two oil prices come from. On the left, a rig in the North Sea: Brent, the crude that most of the world's oil is priced against. On the right, a tank farm at Cushing in Oklahoma: WTI, the American crude, priced where the pipelines meet. They are two kinds of oil from two places, each with its own price, usually a few dollars apart and not always the same way round. A platform lists both, and the chart of one is not the chart of the other.

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