In conclusion I would like to provide an economic explanation for oil prices of selected brands. The most popular traded oil brands are Brent North Sea Crude (commonly known as Brent Crude) and West Texas Intermediate (commonly known as WTI). Brent and WTI crude have different properties, which result in a price differential called a quality spread. They are also located in different parts of the world (Brent in Europe and WTI in North America). This is referred to as a location spread.

Crude oil is a fundamental source of energy for the world’s economy. Besides being one of the most actively traded commodities, the price of crude oil is extremely sensitive to geopolitical and weather events.