Oil (5): Not All Oil is Equal Flashcards
1
Q
What are the three different oil benchmarks used?
A
- Brent Oil
- West Tax Intermediate (WTI)
- Western Canada Select (WCS)
2
Q
Who uses the Brent Oil benchmark? What are its characteristics?
A
Middle East, Africa, and Europe.
- Coastal access makes it easy to move
- Inexpensive (use large tanks)
3
Q
Who uses the WTI benchmark? What are its characteristics?
A
US (Oklahoma).
- No global reach (no coastal access)
- Price discount to Brent Oil
4
Q
Who uses Western Canada Select (WCS)?
A
Canadian benchmark.
- Heavier, so it stays away from price markets
- Price discount to WTI
5
Q
What price are oil producers’ revenues based on?
A
Bitumen netback price.
6
Q
Why are price discounts unavoidable to a certain extent?
A
The oil produced in places like Alberta are heavier and lower quality than Brent or WTI. They’re also located further from customers.
