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Brent Crude

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									Brent Crude is the biggest of the many major classifications of crude oil consisting of Brent
Crude, Brent Sweet Light Crude, Oseberg, Ekofisk, and Forties. Brent Crude is sourced from the
North Sea. The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent
petroleum. It is used to price two thirds of the world's internationally traded crude oil supplies.

The other well-known classifications (also called references or benchmarks) are the OPEC
Reference Basket, Dubai Crude and West Texas Intermediate (WTI).

The name "Brent" comes from the naming policy of Shell UK Exploration and Production,
operating on behalf of ExxonMobil and Royal Dutch Shell, which originally named all of its
fields after birds (in this case the Brent Goose).

Petroleum production from Europe, Africa and the Middle East flowing West tends to be priced
relative to this oil, i.e. it forms a benchmark. However, large parts of Europe now receive their
oil from the former Soviet Union, especially through Russia.

Characteristics
Brent blend is a light crude oil, though not as light as WTI. It contains approximately 0.37% of
sulphur, classifying it as sweet crude, yet again not as sweet as WTI. Brent is suitable for
production of gasoline and middle distillates. It is typically refined in Northwest Europe.

Brent Crude has an API gravity of around 38.06 and a specific gravity of around 0.835.

Trading
The symbol for Brent crude is LCO. It was originally traded on the open-outcry International
Petroleum Exchange in London, but since 2005 has been traded on the electronic
IntercontinentalExchange, known as ICE. One contract equals 1,000 barrels (159 m3). Contracts
are quoted in U.S. dollars. Each tick lost or gained equals $10.

Pricing

Prior to September 2010, there existed a typical price difference per barrel of between +/-
3 USD/bbl compared to WTI and OPEC Basket, however since the autumn of 2010 there has
been a significant divergence in price compared to WTI, reaching over $11 a barrel by the end of
February 2011 (WTI: 104 USD/bbl, LCO: 116 USD/bbl). Many reasons have been given for this
widening divergence ranging from a speculative change away from WTI trading (although not
supported by trading volumes), Dollar currency movements, regional demand variations, and
even politics. The depletion of the North Sea oil fields is one explanation for the divergence in
forward prices. In February 2011 the divergence reached $16 during a supply glut, record
stockpiles, at Cushing, Oklahoma. Historically the different price spreads are based on physical
variations in supply and demand (short term).

Delivery dates
In addition to the IntercontinentalExchange, Brent crude futures are also traded on the NYMEX
and have delivery dates in all 12 months of the year.

								
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