Brent Oil Futures


Brent Oil Futures is a kind of commodity. Brent oil serves as a benchmark for other oils and it is also part of the “crude oil basket” that helps set the price for other crude oils. Brent is used to price oil in Europe, Asia, and South Africa.

More About Brent Oil Futures

Continue reading to learn more about:

Oil Futures
Futures contracts for Brent crude oil
Difference Between Crude Oil and Brent Crude Oil
How do Brent futures work?
How are Brent's futures settled?


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Oil Futures


Oil Futures refers to the price of oil at a specified time in the future. In other words, you cannot purchase oil now. Instead, you can purchase an oil futures contract that guarantees that you will receive a specific amount and grade of crude oil for delivery at a certain date in the future. The price of the futures contract is determined by several factors, including trading on the New York Mercantile Exchange (NYMEX) and whether an investor believes oil prices will rise or fall.


 
 

Futures contracts for Brent crude oil


The Brent Crude Oil futures contracts are one of the most popular contracts available on the New York Mercantile Exchange (NYMEX) and London International Financial Futures and Options Exchange (LIFFE), along with other European exchanges. These contracts are heavily traded, especially around the world due to the large influence that this particular crude oil has on price. Brent Crude Oil is considered to be a benchmark against other lighter-type crudes from West Africa and South America, as well as being a bench mark for higher quality medium grade sweet crudes from all parts of the world.

 

Difference Between Crude Oil and Brent Crude Oil

•The Brent oil futures contract is a currency traded contract that represents the difference in price between two types of crude oil. Crude oil is the source of all petroleum products, ranging from gasoline, to diesel fuel, and heating oil. Oil is one of the most sought after commodities on the planet. So much so that there are financial instruments solely based around it, such as the Brent oil futures contracts.
•Brent crude oil is a light, sweet grade of crude that is derived from the North Sea. Crude oil prices and U.S. dollar exchange rates are important factors that influence the price of Brent crude oil and other international benchmark prices.
 
  • How do Brent futures work?

    The Brent oil futures contract represents a barrel of Brent Crude Oil, which is extracted from the North Sea. This form of crude oil is thought to be less refined than others and therefore has higher energy content. This means it has more carbon dioxide, sulphur and nitrogen compounds, which are the main reason for its higher density. The exchange rate for Brent Crude Oil can often reflect how markets feel about OPEC’s potential future output, as well as a host of other factors such as seasonality, refinery maintenance and supply disruptions.
  • How are Brent's futures settled?

    Brent oil futures are settled in cash based on the price of the benchmark crude oil marker, which is used as the reference price for European crude oil. It is used as a pricing mechanism in currency and commodity markets all over the world. Each day this benchmark crude is compared to other traded oils and set as a price marker. Underlying Brent Crude Oil futures prices are also known to be stable as they move with some consistency causing less fluctuation. This makes it easier to figure out how much Brent Crude Oil prices will change after maturity.