What Determines the Performance of Brent Crude Oil?

Brent is the international benchmark for Atlantic basin crude oil and is a contract that trades on London's ICE futures exchange. So, what exactly influences Brent crude oil prices during any given trading session? It is not a single factor but rather a wide range of components, which can send prices rallying or plummeting to kick off a trading week or finish off a session.

Here is a list of factors that can influence the price of Brent crude oil:

• Supply Since Brent is used in Africa, Europe, and the Middle East, how much is being produced in these major markets can heavily weigh on the performance of Brent crude oil.
• Demand The world consumed about 100 million barrels of oil per day in 2022, making prices sensitive to supply shocks, which means that demand can also affect the broader movement in Brent crude oil.
• Market sentiment Investor sentiment can also have a factor, whether traders think a global recession will kill demand or investors anticipate that China reopening its economy will trigger more demand.

While investors focus their attention on West Texas Intermediate (WTI) crude oil, global energy markets do also pay attention to Brent. This is because Brent is light and sweet. As a result, it is preferred for producing gasoline, diesel, and other petroleum products for consumer and commercial consumption.

Despite Brent being more expensive than WTI, they trade roughly in sync, so many elements that help or hurt WTI will also shape the Brent trade in the same way.

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