Crude Oil: WTI, Brent and What Moves Them

Two Benchmarks, One Global Market

When you see an oil price on a screen, you are almost certainly looking at one of two numbers: WTI Crude or Brent Crude. These are not two different products in the way that wheat and corn are different — they are both light, high-quality crude oils. What separates them is where they come from, where they are delivered, and who uses them as a pricing reference.

WTI stands for West Texas Intermediate. It is produced in the United States and its futures contract calls for physical delivery at Cushing, Oklahoma — a landlocked storage hub in the middle of the country. Brent, named after a North Sea oilfield, is a blend of crudes extracted from fields off the coasts of Norway and the United Kingdom. Because it loads onto tankers directly, it can be shipped almost anywhere in the world.

That logistical difference is why Brent became the dominant global reference. Roughly two-thirds of internationally traded crude oil is priced off Brent. Countries in Africa, the Middle East, and Asia typically sell their oil at a fixed discount or premium to Brent — a structure traders call a differential. WTI, meanwhile, is the main benchmark for crude produced and refined within the US.

What a Barrel Actually Means

Both benchmarks are quoted in US dollars per barrel. A barrel of crude oil is exactly 42 US gallons — a standard unit that dates back to the 19th-century Pennsylvania oil rush, when producers literally used wooden barrels. That is the number you see on any price table: one barrel, 42 gallons, priced in dollars and cents.

It is worth noting that when you watch oil prices move, you are almost always watching a futures contract, not a live cash transaction for physical oil. The front-month contract — the one closest to expiration — is the price quoted on most financial sites. For a deeper look at how futures differ from immediate cash transactions, see Spot vs Futures Prices and What Is a Futures Contract.

Light Sweet vs Heavy Sour: Why Grade Matters

Not all crude oil is the same quality. Petroleum engineers describe crude along two dimensions: density (light to heavy) and sulfur content (sweet to sour). "Light" crude flows easily and yields more high-value refined products like gasoline and jet fuel. "Sweet" crude has low sulfur, which makes it cheaper to refine because it requires less processing to meet environmental standards.

Both WTI and Brent are classified as light sweet crudes, which is why refiners prize them and why they serve as quality benchmarks. Heavier, higher-sulfur crudes from places like Venezuela or parts of the Middle East trade at a discount to Brent, reflecting the extra refining cost involved. The table below shows how the two main benchmarks compare on key characteristics.

OPEC+, Spare Capacity and Supply Decisions

OPEC and OPEC+ — the Organization of the Petroleum Exporting Countries and its allied producers — collectively control a large share of global oil production. When the group agrees to cut output, less crude reaches the market, which economists generally read as upward pressure on prices. When it raises output targets, the reverse applies. OPEC+ meetings are some of the most closely watched events on the economic calendar.

A concept that goes hand-in-hand with OPEC+ is spare capacity — the volume of oil a producer could pump quickly if it chose to, but is currently holding back. When spare capacity is thin, any unexpected disruption (a pipeline outage, a hurricane, a geopolitical flare-up) has more potential to move prices sharply because there is little buffer. When spare capacity is large, markets tend to be less sensitive to individual shocks.

It is worth remembering that OPEC+ quotas are targets, not guarantees. Member countries sometimes produce above or below their agreed levels, and the group's actual influence on prices depends on whether member compliance is high. Traders and analysts track monthly production data from each member carefully. You can read more about the broad forces that shift commodity prices in What Moves Commodity Prices.

Weekly US Inventory Data: A Market Event Every Wednesday

Every Wednesday morning, the US Energy Information Administration (EIA) publishes its Weekly Petroleum Status Report, which shows how much crude oil is sitting in American storage tanks. This report is a regular market-moving event. A larger-than-expected build in inventories (more oil in storage than analysts predicted) is generally read as a sign of weak demand or oversupply. A bigger-than-expected draw (inventories falling more than forecast) tends to be read as the opposite.

The report also covers products like gasoline and distillates (diesel, heating oil). Cushing storage levels get special attention because WTI contracts are physically settled there — when Cushing tanks fill up, it puts direct mechanical pressure on the WTI price specifically. This is exactly what happened in April 2020, when the WTI front-month contract briefly fell below zero dollars per barrel. Storage at Cushing was nearly full, and holders of expiring futures contracts had nowhere to deliver their oil, so they paid buyers to take it off their hands — a dramatic illustration of how physical delivery mechanics can overwhelm normal price logic.

The American Petroleum Institute (API) also releases a private inventory estimate on Tuesday evenings, giving markets a preview. Differences between the API and EIA figures are themselves a source of short-term price movement.

From Crude to Products: The Refining Link

Crude oil is not used directly — it is processed in refineries, which separate it into products like gasoline, diesel, jet fuel, heating oil, and petrochemical feedstocks. The profitability of this process is captured by a measure called the crack spread. The crack spread is roughly the difference between what refined products sell for and what the crude oil input costs — a proxy for refinery profit margins.

When crack spreads widen, refineries have an incentive to run at higher capacity, which increases their demand for crude. When they narrow — say, because gasoline demand drops off after summer driving season — refineries may pull back, reducing crude demand. This is one reason seasonality matters in oil markets: US gasoline demand typically peaks in summer and heating oil demand peaks in winter, creating recurring patterns in refinery activity and crude appetite.

For energy markets beyond oil, the dynamics of storage, seasonal demand, and benchmark pricing apply in different ways to natural gas as well — a market with its own quirks around Henry Hub pricing and winter demand spikes.

The Brent-WTI Spread and the Futures Curve

The price gap between Brent and WTI — the Brent-WTI spread — fluctuates based on pipeline capacity in the US, export infrastructure, and relative supply conditions on each side of the Atlantic. Historically, WTI used to trade at a small premium to Brent because of its slightly higher quality, but the US shale boom created so much landlocked supply at Cushing that Brent often trades above WTI now. The spread can be a few cents or several dollars per barrel depending on conditions.

Oil futures also display what traders call a futures curve — a line showing prices for delivery at different future dates. When later months are priced higher than the front month, the market is in contango; when later months are cheaper, it is in backwardation. The shape of this curve carries information about the market's read on near-term supply and demand. A deep contango, for instance, often signals a storage glut. For a full explanation of these mechanics, see Contango and Backwardation.

You can follow live crude oil prices alongside other energy and raw material markets on the commodities page, and see how they sit within the broader picture of global economic indicators.