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Analysis Of Brent Crude Oil Prices

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Overview Of ‘Brent’ Crude Oil: The ‘Brent’ blend of crude oil is the most common form of crude oil used worldwide, with roughly two-thirds of all crude contracts around the world referencing the Brent blend (reference). ‘Brent’ oil is drawn from more than a dozen oil fields spanning across the North Sea off the coast of the UK and Norway. This particular type of crude oil is also considered to be light and sweet (therefore low sulfate), making it ideal for refiners to make gasoline and diesel fuel (). Although the ‘Brent’ is destined for European markets, it forms more than half of the worlds globally traded supply of crude oil. 1.1 Historical And Current Trends In ‘Brent’ Crude Oil Prices: 1.1.1 Long Run Trends:…show more content…
During this period, the price of ‘Brent’ crude oil (like WTI) reached an all time high in July of 145.61 USD/BBL in response to strong economic conditions prior to the Global Financial Crisis hitting in early 2009. The price of ‘Brent’ crude oil also similarly bottomed out in 1970, with a record low of 2.23 USD/BBL and following the GFC, prices sharply fell, with prices at 62.04 USD/BBL as of April 2015. Over the 45-year period, significant events such as the GFC, the Iran/Iraq war, the Iranian revolution and various OPEC cuts (as shown in graph 1) has caused the price of ‘Brent’ crude oil and crude oil as a whole to historically be fairly volatile and as such, these various political and economy-wide factors provide an explanation for volatility in prices over the past 45 years. 1.1.2 Recent Trends And Current Prices: The price of North Sea ‘Brent’ crude oil is sitting at roughly $62 per barrel, with this figure fluctuating around the sport price of $60 per barrel. During the month of April 2015, prices have roughly swung between $65 per barrel and a low of $60 per barrel, as shown in the figure below: Graph 3: (Reference) Overall, prices of the ‘Brent’ blend have fallen over the past 12 months, with a 52-week range of 47. 68 – 115.71 and a 1-year return of -43.61% indicating the sharp decline in the price of ‘Brent’ crude oil from a peak of $112.36 on 01/06/2014 (reference). Although prices of the ‘Brent’
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