US crude oil futures traded in the negative territory for the first time in history, as low demand because of the COVID-19 pandemic has led to a supply glut.
On April 20, West Texas Intermediate (WTI) May contract traded 306 percent lower to settle at -$37.63 a barrel, after going as low as -$40.32.
The cost of Brent crude, the international benchmark, was higher since more storage space is available across multiple locations, making deliveries easier. Brent slid 9 percent on April 20, settling at $25.57 a barrel.
What is the difference between WTI and Brent?
While Brent crude is extracted from the North Sea, WTI is usually extracted from US oil fields in Texas, Louisiana, and North Dakota.
WTI, with a lower sulphur content (0.24 percent) than Brent (0.37 percent), is considered "sweeter" . Both oils are relatively light, but Brent has a slightly higher API gravity, making WTI the lighter of the two.
American Petroleum Institute (API) gravity is an indicator of the density of crude oil or refined products.
Brent crude price is the international benchmark price used by the Organisation of Petroleum Exporting Countries (OPEC), while WTI crude price is a benchmark for US oil prices.
Since India imports primarily from OPEC countries, Brent is the benchmark for oil prices in India. Most of the oil produced in Europe, Africa and the Middle East is priced according to the cost of Brent crude.
Brent is the reference for about two-thirds of the oil traded around the world and hence it is slightly more sensitive to geopolitical tensions, according to Investopedia.
Brent futures are primarily traded on the Intercontinental Exchange (ICE) in London, while WTI is the underlying asset for oil futures on the New York Mercantile Exchange (NYMEX).
Cost of shipping for Brent crude is typically lower, since it is produced near the sea and it can be put on ships immediately. Shipping of WTI is priced higher since it is produced in landlocked areas like Cushing, Oklahoma where the storage facilities are limited.
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