North Sea Brent Crude

What Is North Sea Brent Crude?

North Sea Brent Crude is a blended light sweet crude oil recuperated from the North Sea in the mid 1960s. Brent crude oil has generally low sulfur content and a moderately high gravity on the American Petroleum Institute's standard scale.

Pricing for North Sea Brent crude, classified as a sweet light crude, fills in as the most widely involved benchmark for other worldwide oil markets.

Grasping the North Sea Brent Crude

North Sea Brent crude contains a blend of oils recuperated from the oilfield systems in the North Sea.

Classification of this crude is as a light-sweet crude, due to its low thickness and low sulfur content. Light sweet crude oils are more straightforward to process into products, for example, fuel since they contain a higher extent of hydrocarbon particles than different oils. In this manner, they will generally bring higher prices on commodity markets. Sweet crude is a classification of petroleum that contains under 0.42 percent sulfur. Sulfur is bothersome in crude oils since it lowers the yield of high-esteem refined products including gas and plastics.

Benchmark crude oil fills in as an investment device for the industry in setting a point to act as a standard of comparison while assessing various assortments of crude oil. Another critical benchmark crude is West Texas Intermediate (WTI) which is lighter and sweeter than North Sea Brent crude. WTI futures and options are the most actively traded energy products in the world.

Investing in North Sea Brent Crude

Since the oil crisis of the late 1970s, by far most of crude oil commodity sales have occurred on the futures market. Brent futures are accessible on the Intercontinental Exchange in Europe as well as the New York Mercantile Exchange (NYMEX). Options linked toward the North Sea Brent crude benchmark are likewise widely accessible.

Investors regularly trade Brent-related commodity contracts either as a hedge or on a speculative basis. Those taking hedge positions incorporate companies that produce and market crude oil, as well as treatment facilities or different elements that cycle the oil. Hedging strategies for firms in fuel-subordinate industries, like aircrafts, may likewise exploit Brent-related contracts.

For instance, some hedging strategies include trading on crack spreads related to Brent, in which traders take simultaneous long and short situations in Brent crude and completed products that utilization Brent crude as a raw material. For these types of trades to pay off, the price differential between the raw materials and the completed goods must enlarge over the long run. This type of contract could appeal to an oil refinery seeking to safeguard its profit margin from price volatility in the crude oil market.

History of North Sea Area Crude Oil

This large North Sea deposit is limited by the United Kingdom, Norway, the Netherlands, Germany, France, Denmark, and Belgium. Active oil fields incorporate the Brent, Forties, Oseberg, Ekofisk, and Ninian systems.

Oil was found in the area in 1859, however it was only after 1966 that commercial exploration of the fields was embraced. Commercial exploration filled during the 1970s, just before the Organization of Petroleum Exporting Countries (OPEC) oil crisis. The primary pipeline transportation shortly after 1975. The high quality of the oil, combined with regional stability of the North Sea area and OPEC oil embargo fears, made the cost of production of the North Sea Brent crude beneficial.

At the hour of exploration, Shell UK Exploration and Production would name production oilfields after birds. The North Sea field gets its name from the brent goose, a North American animal varieties.

Highlights

• Since the oil crisis of the late 1970s, by far most of crude oil commodity sales have occurred on the futures market.
• Pricing for North Sea Brent crude, classified as a sweet light crude, fills in as the most widely involved benchmark for other worldwide oil markets.
• North Sea Brent Crude is a blended light sweet crude oil recuperated from the North Sea in the mid 1960s.
• Light sweet crude oils are more straightforward to process into products, for example, gas, and that means they will generally get higher prices on commodity markets.
• Investors normally trade Brent-related commodity contracts either as a hedge or on a speculative basis. Those taking hedge positions incorporate companies that produce and market crude oil, as well as treatment facilities or different elements that interaction the oil.