There’s no debate about it: the CME/NYMEX domestic sweet crude (DSW) futures contract in Cushing, OK, is the most widely followed benchmark in US energy markets. It is the price that is discussed on the nightly news and general media publications. And now, with US WTI exports deliverable under the Brent contract, Cushing’s domestic sweet is likely to set the price of crude globally. But the fact is that most of the crude oil traded in physical markets in North America does not have a DSW-at-Cushing reference price, but instead has a spread over Cushing – higher or lower on a given day based on the unique quality, location and location of each crude. supply/demand characteristics. In today’s RBN blog, we discuss how the behavior of benchmark Cushing spreads can explain what’s happening with crude oil production, shipping volumes, storage and, of course, exports.
There are many crudes traded in North America, each with its own density (measured in API degrees), sulfur content (measured in percentages), total acid number (TAN), and other qualities. The value of all these crudes, with names like Midland Sweet (MIDSWT), Magellan East Houston (MEH), Mars, Bakken, West Texas Light (WTL) and Western Canadian Select (WCS) are typically quoted as differentials to the Delivery price of DSW to the NYMEX Cushing contract (see Trade in the USA).
It is well known and understood in the rarified world of US and Canadian crude traders that the behavior of these spreads can tell a lot about what is going on with crude oil production, shipping volumes, the ups and downs of the ‘storage and therefore important today: exports. But to make use of this window in crude oil markets, you must have access to data, the means to put current price behavior in historical perspective, and the expertise to interpret what it means when spreads widen , narrow, invert. (premium vs. discount), or burst. Apart from the rare American and Canadian traders referred to above, most mortals are unaware of these ideas. Bye now.
Warning: Today’s blog is a cheeky ad TradeView: Crude Oil Price Analyticsa new report and dataset developed by RBN and Link data services (LDS), the branch of the data provider Link the raw resources, the Gulf Coast’s leading physical crude oil brokerage. More on LDS in a minute. For now, suffice it to say that LDS provides data and insights into what moves the physical crude oil markets. RBN does the data analysis, interprets the trends and prepares an understandable explanation of what is happening in the markets. The idea is to place US and Canadian crude oil trading in a context where anyone can surround themselves and provide real value to a wide range of market participants and market followers, from those physical traders in oil rares to market analysts and business development people. , and global players who are not intimately familiar with the peculiarities of the US and Canadian crude markets.
