Commodity Futures Trader

Posts Tagged ‘natural resources’

North Sea Brent was located in the North sea at the beginning of the 60′s and is refined and consumed by; the UK, Norway, Germany, Denmark, and the Netherlands.

Brent Crude is one of many classifications of North Sea oil of which there are; Brent Crude, Brent Light, Sweet Crude, Ecofisk, Oseberg, and Forties. Brent crude is the biggest of all the classifications of North Sea oil, and its name originates from the bird the ‘Brent Goose’. Exxon and Shell adopted a policy of naming their oil fields after birds. The ‘Brent’ field itself from which the crude was taken, was found by the Shell petroleum company in the North East of Shetland back in 1971.

North Sea Brent Crude is used as a benchmark to price two thirds of all the oil traded on the international market. Other remowned classifications inclue Dubai Crude, and West Texas Intermediate (WTI), which is a sweeter and lighter form of crude. Crude oil acquires the term ‘sweet’ if the sulphur content is less than 0.5%. If it is higher than 0.5% it is considered ‘sour’ crude. Crude oil with a low sulphur content is the most coveted of all oil and is almost always refined into petroleum.

The most coveted, highly prized and sought after oil in both the North Sea and around the world is,’ Light-sweet crude,’ as its the easiest to refine into gasoline, kerosene and high quality diesel.

For the past several months crude oil prices have been difficult to keep up with. The daily price fluctuations have been extreme. While moving from a high of about $147.00 a barrel in July 2008, to a recent low of just under $32.00 a barrel, crude oil prices experienced gut wrenching volatility.

For crude oil there is little hope of near term price stability. The worldwide financial market meltdown has contributed to a slow down in oil demand as economic activity decreases. This slow down in demand is offset by a continued decline of crude oil production at the world’s major oil fields. The long term growth in oil products demand in high growth countries like China, India, and Brazil, will keep crude oil market supply and demand closely balanced. This will keep crude oil markets extremely volatile as small changes in supply will have a large effect on price.

Oil exploration and production projects have been cancelled or postponed due to current relatively low crude oil prices. Interest in alternative energy projects have decreased along with the fall in the price of oil. These events are setting the stage for another price explosion within the next couple of years.

For the past several months crude oil prices have been difficult to understand. The price fluctuations have been extreme. While moving from a high of about $147.00 a barrel in July 2008, to a recent low of just under $32.00 a barrel, crude oil prices experienced gut wrenching daily volatility. To say that the market have been unusually volatile is an understatement.

For crude oil there is little hope of near term price stability. The worldwide financial market meltdown has contributed to a slow down in oil demand as economic activity decreases. This slow down in demand is offset by a continued decline of crude oil production at the world’s major oil fields. The long term growth in oil products demand in high growth countries like China, India, and Brazil, will keep crude oil market supply and demand closely balanced. This will keep crude oil markets extremely volatile as small changes in supply will have a large effect on price.

Oil exploration and production projects have been cancelled due to current relatively low crude oil prices. Interest in alternative energy projects have decreased along with the fall in the price of oil. These events are setting the stage for another price explosion within the next couple of years.