LightSweetOil.com

Due to the many uses of light sweet crude oil, it is one of the most highly traded commodities. This commodity is used in the making of kerosene, jet fuel, diesel fuel and gasoline. Naturally this places light sweet crude oil in high demand the world over. Light sweet crude oil is traded in large volumes of 1,000 barrels per unit. The largest sweet crude oil markets are located in London, New York and Singapore.

When considering the price of this commodity it is important to note that there are three benchmarks used to determine this. The primary of the three would be Brent, as this is the world benchmark. The lessor of the three would include, West Texas Intermediate, (which is the U.S. benchmark), and OPEC which determines the basket price, or the average price of 15 different crude oil types available on the market.

Brent Crude is the largest of the significant classifications of oil, (Brent Crude, Brent Sweet Light Crude, Ecofisk, Oseberg and Forties). Brent Crude oil producer also goes under the titles of Brent Petroleum, London Brent and Brent Blend. Brent Crude is sourced from the North Sea and is used to price 2/3rds of the world’s internationally traded crude oil supplies. West Texas Intermediate (WTI) is the sweet crude oil type referenced in North American news concerning oil prices alongside Brent Crude. OPEC Basket consists of a weighted average price for the petroleum blends that are produced by OPEC countries. OPEC increases and decreases production in attempts to maintain the oil price between the higher and lower limits, which makes it significant for market analysts.

As with most commodities, the price of sweet crude oil tends to fluctuate due to increases and decreases in demand during different times of the year and various other factors. For example, the price of oil usually tends to be higher in the summer due to an increased demand for gasoline as a result of more driving time spent on the road by motorist driving to various vacation resorts. In 2008 economic growth in the U.S and China lead to the fear that oil supply would not be able to meet the demand and that this, in turn, would greatly increase the price. However, the increase in oil was actually caused by increased investments by hedge fund and future traders.

Sweet crude oil prices over the last 5 years:
(Average price per barrel 2005)
January
$42.21
July
$52.13
February
$42.91/$41.11
August
$58.07
March
$48.55/$47.80
September
$58.56
April
$46.63/$46.38
October
$55.12
May
$43.27/$43.02
November
$51.18
June
$49.56/$49.80
December
$52.31

(Average price per barrel 2006)
January
$58.30
July
$66.28
February
$54.65
August
$64.93
March
$55.42
September
$55.73
April
$62.50
October
$50.98
May
$62.94
November
$50.98
June
$62.85
December
$54.06

(Average price per barrel 2007)
January
$46.53
July
$65.96
February
$51.36
August
$64.23
March
$52.64
September
$70.94
April
$56.08
October
$77.56
May
$55.43
November
$86.92
June
$59.25
December
$83-46

(Average price per barrel 2008)
January
$84.70
July
$126.16
February
$86.64
August
$108.46
March
$96.87
September
$96.13
April
$104.31
October
$68.50
May
$117.40
November
$49.29
June
$126.33
December
$32.94

(Average price per barrel 2009)
January
$33.07
May
$51.27/$51.02
February
$31.04
June
$61.71/$61.46
March
$40.13/$39.88
July
$60.11
April
$42.45/$42.20

In recent news it was reported that oil prices stayed below $60/barrel. There are concerns that the global economy will not quickly improve and oil demand will continue to be low. Prices fell twenty cents, settling at $59.69 a barrel on the New York Mercantile Exchange for August delivery. Earlier in the season the price was as $59.30.

Since June 30th of this year, oil prices have dropped approximately $14/barrel, a decrease of 19%, following high unemployment rates in the U.S. and Europe. There is much doubt that the global economy will show strong recovery this year.

Gasoline sales in the U.S. were poor over the recent 4th of July holiday weekend. This is significant as this is usually when gasoline demand is at its highest for the summer in the U.S. Further more, the decline in oil prices came despite a decrease in the dollar and an attack on an oil facility in Nigeria. Often viewed as a hedge against inflation, the dollar tends to trade inversely with oil. However, recently the dollar was down against the euro and yen.

Militants in Nigeria announced that they had attacked an oil depot as well as loading tankers in Lagos. In the past years, attacks have been responsible for cutting Nigeria’s oil output by 20%. According to analyst Stephen Schork, due to oil prices falling despite a weaker dollar and the attacks on supply point, the trend toward higher oil prices might be over.