Crude Oil Prices
Crude oil is sold through a variety of contracts and in spot transactions. It is also traded on futures markets as a mechanism to distribute risk. The pricing of crude oils is transparent through the use of crude oil benchmarks. West Texas Intermediate (WTI – USA) is used as a benchmark in oil prices and it is the underlying commodity of Chicago Mercantile Exchange's oil futures contracts. Other important oil markers include Brent (Europe, Africa and Asia), the Dubai Crude, the OPEC Reference Basket, Dubai Tapis and Dated Brent (in Asia-Pacific), Bonny Light used in Nigeria and Mexico's Isthmus. West Texas Intermediate is used primarly in the U.S and it is a light (API gravity) and sweet (low-sulfur) thus making it ideal for producing low-sulfur gasoline and low-sulfur diesel. Brent is not as light or as sweet as WTI but is still a high-grade crude.