#Update the Latest Mining & Crude Oil Commodity Information

By | April 24, 2022

MCrude oil is a natural substance that can be found in rock formations on earth. To extract maximum value from Crude Oil, this substance needs to be purified into refined petroleum products such as gasoline, diesel, kerosene, etc.

Crude oil can be categorized according to its type as well as the name of the oil product from the exploration itself. Trading petroleum commodities cannot be separated from these distinctive characters.

Crude oil can be categorized according to its type as well as the name of the oil product from the exploration itself. The types of oils include:

  1. Light Petroleum type Light Crude Oil is a liquid oil with low density and viscosity that flows freely at room temperature. The price of this type of oil is usually more expensive than Heavy Crude Oil because it has a larger percentage to produce fuel and diesel after processing. For this reason, light crude oil products are widely used as a benchmark for world oil prices, including WTI oil and Brent Crude Oil. Dubai Crude Oil is also included in this group even though it actually has a medium viscosity (light for the Middle East, but cannot be considered light if it is produced in the United States).
  2. Heavy The opposite of Light Crude, Heavy Crude Oil is very viscous and cannot be extracted under normal conditions. As a result, the production, transportation, and processing of Heavy Crude Oil is more difficult. However, the world’s supply of Heavy Crude resources is actually greater than that of Light Crude. This type of petroleum is also available in several types, including Heavy Crude with high sulfur content (more than 1%) such as those in North America, South America, and the Middle East; and Heavy Crude with low sulfur content (below 1%) as found in Africa.
  3. Sweet The New York Commodity Market (NYMEX) defines petroleum with a sulfur content of less than 0.42% as Sweet Crude Oil. It was named “Sweet” because the low sulfur content gave the oil a slightly sweet taste and oil seekers in the 19th century determined the quality of an oil by tasting and smelling it. High quality Sweet Crude is generally processed into fuel oil (BBM) and is in great demand. In this case, Light Sweet Crude Oil is the most sought after type of crude oil in the World. This type of crude oil is spread across Southeast Asia and the Pacific (including Indonesia), China, Iraq, North America, Europe and Africa.
  4. Sour The opposite of Sweet Crude, Sour has a high sulfur content and is more difficult to purify. Sour Crude Oil can be very toxic and corrosive, especially when it contains large amounts of hydrogen sulfide. Even small concentrations of this gas make the oil smell like rotten eggs and are toxic when inhaled. Therefore, this type of oil needs to be stabilized by removing the elemental Hydrogen Sulfide before being transported further. Trading in petroleum commodities typically uses the unit “Barrels” which equals the standard 42 US Gallons. After processing, the output is approximately 20 gallons of gasoline and 7 gallons of diesel, plus about 17 gallons of other oil products, so that with an input of 42 gallons, it can produce an output of about 44 gallons in various product forms.

Oil Price Fundamentals

Currently, there are two of the most widely used reference prices for crude oil in the world. Namely Brent and WTI (West Texas Intermediate) oil prices. Brent (Brent Crude) is a term for oil from the North Sea (Europe), with the name Brent coming from mining land in the North Sea, which was opened in 1970.

The price of Brent oil has been the basis of price formation since 1971 for almost 40% of the value of oil worldwide, and continues to be used today.

However, in its development, the United States’ oil production has been increasing and has contributed greatly to the world market share, so that the price of WTI oil began to be used as a reference since around 2007.

WTI (West Texas Intermediate) is petroleum that is produced in North America, and in its application is mostly used for gasoline products. This type of oil is lighter and easier to process, so it is in great demand, especially in the US and China.

Besides Brent and WTI, there are other types of oil that are widely traded in the world, such as Dubai Crude (oil from Dubai), Oman Crude (oil from Oman), Urals Oil (the reference price for Russia’s exports of oil), and OPEC Reference. Basket (average price of oil exported by OPEC countries). However, the general benchmark for setting oil prices is Brent and WTI.