As John Schiffner of Swan Energy explains, you will find two aspects that usually define the features of oil that make these dissimilarities.
The primary aspect is referred to as API gravity.
API is short for American Petroleum Institute. This is a statistic that is used to calculate how weighty or light petroleum liquid is as compared with h2o.
If the API gravity is under 10, it is actually weightier than water and sinks; if the API gravity is more than 10 then it's lighter than water and floats above water. API is measured in "degrees." Most petroleum valuations fall between 10 and 70 API gravity degrees.
Usually oil with an API gravity between 40 and 45 commands the greatest prices. Oil containing an API above 45 degrees is much less valuable to refine as a result of variations to the molecular composition.
The API gravity from the oil that Swan Energy is presently pulling out of its wells in Oklahoma is around 38.00 to 42.00 degrees.
You will find three main types of oil determined by API Gravity:
* Light crude oil: API gravity higher than 31.1 degrees * Medium crude oil: API gravity between 22.3 and 31.1 * Heavy crude oil: API gravity lower than 22.3 * Extra heavy crude oil: API gravity under 10.00
There can be some variations in grading from party to party, but this will give you a fine baseline to conceptualize the grades of oil.
The second factor is how sweet or sour oil might be. This can be in line with the sulfur content of the petroleum. Petroleum is considered "sweet" if it is made up of lower than 0.5% sulfur. "Sour" oil describes petroleum which has greater than 0.5% sulfur.
The phrase "sweet" emanates from the nineteenth century prospectors who would taste small quantities of the oil to determine its high quality. The low amount of sulfur gives the oil with a slightly sweeter flavor and pleasant smell.
Sour oil is much more widespread than sweet oil. Sour oil is located in Canada, the Gulf of Mexico, areas of South America as well as most of the Middle East; sweet crude is much more frequently manufactured in the Central United States, nearly all of Africa, the Asia Pacific and the North Sea.
Sweet crude is ideal as it will take less refinement so as to get rid of impurities. Light sweet crude has the greatest demand while heavy sour crude is exchanged for much less
The oil that Swan Energy is presently getting out of Oklahoma is regarded as Light Sweet Crude.
By using these two factors, oil will then be priced on the world market using the various kinds of oil. There are two key standards for world oil prices: WTI crude oil and Brent crude oil. Though both are light sweet crude oils, historically WTI trades at a premium (by merely a few bucks a barrel) given that it's generally lighter and sweeter. Swan Energy sells the oil manufactured by the Joint Venture wells using the WTI index not the Brent index.
In 2010, for the first time, this modified and today WTI is trading below Brent as much as 20%.
The difference between WTI and Brent started at the conclusion of 2010 and was highlighted in February of 2011. You will find two main elements contributing to this. First are the Libyan problems and the Arab Spring, which reduced availability of light sweet crude to Europe. The other, which can be more long lasting compared to Libyan crisis, is the oversupply at the main safe-keeping facility in Cushing, Oklahoma.
As the new pipelines from Canada arrived online along with oil production increases in North Dakota and Colorado combined with the two pipelines delivering oil up from the Gulf resulted in the Midwest refiners becoming oversupplied with oil. What could also be an element is the oil coming from these places may not compare in quality to the light sweet crude oil from the Midwest. These factors are all playing a major part in generating a large delta in between Brent and WTI.
There are many experts that feel that market tricks may very well be playing a componant too. In summary we will need to wait and see what happens as the turmoil in Libya settles and as increasingly more oil arriving form Canada and North Dakota is getting delivered by truck and train to the Gulf.
Eventually, demand remains high and while we may see short term increase in supply, oil supply is still decreasing globally which will keep oil prices high, as evident by the rising WTI costs as it closes the gap between Brent and WTI at the conclusion of October and start of November.
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For more information on the differences between WTI and Brent oil, visit this website http://swan-energy-inc.livejournal.com/2716.html/
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