Hoover Institute
Published: 05-14-08
. . . There are 161 different types of crude oil traded on the international market?
Facts on Policy: Oil Prices II: Definitions
When the media mention the price of crude oil breaking $100 a barrel they are referring to one measure of oil prices—typically the NYMEX futures.
When the Federal Reserve Board or Department of Energy mentions historical crude oil price data they might be referring to a different set of prices.
According to the Department of Energy there are 161 different types of crude oil and several different prices at which crude oil is sold. The following are the most common:
• NYMEX (New York Mercantile Exchange) futures is a market-determined price to buy or sell 1000 barrels of a type of oil usually Western Texas Intermediate (WTI) which means that the NYMEX futures is strongly correlated with WTI prices. This is the price that is most commonly used in newspapers. The price for crude oil on Contract 1 on NYMEX futures was $119.37 on April 22 2008.
• West Texas Intermediate (WTI; also WTI-Cushing) refers to a high-quality light crude oil that is refined in the United States. This is the benchmark used by the International Energy Agency and commonly in the Western Hemisphere. As of April 22 2008 the spot price for WTI crude was $119.17 per barrel.
bull; Brent Spot (Brent) refers to the price of a blend of 15 crude oils from the North Sea region. It is the benchmark used to measure oil prices in Africa and Europe. Along with West Texas Intermediate (WTI) it is the most commonly referred to benchmark for crude oil prices. Brent prices are typically $1–$2 less than WTI prices. As of April 22 2008 the Brent spot price for crude was $113.54.
• Imported Refiner Acquisition Cost (IRAC) is the volume-weighted average price of all crude oil imported to the United States. Because it is a composite of various oils from various regions prices are often $6–$8 less than WTI and $5 to $6 less than Brent prices.
Establishing a time series with oil prices
The U.S. Department of Energy uses the IRAC to track crude oil prices because this series offers the most consistent time series with which to compare oil price data between 1978 and 2007. However the data do not get reported until two months after the end of the month making this benchmark difficult to use for time-sensitive data.
On the other hand because it is tracked daily the NYMEX futures is useful for making detailed comparisons of recent oil prices.
However since the crude oil futures contract was only launched in 1983 this renders the NYMEX futures prices unconducive for use in a time series that tracks oil prices before 1983.
Thus most time series will either combine NYMEX futures price data with WTI price data or use the IRAC data.
