Light crude oil
Encyclopedia
Light crude oil is liquid petroleum
that has a low density
and flows freely at room temperature. It has a low viscosity
, low specific gravity
and high API gravity
due to the presence of a high proportion of light hydrocarbon
fractions
. It generally has a low wax
content. Light crude oil receives a higher price
than heavy crude oil
on commodity markets
because it produces a higher percentage of gasoline
and diesel fuel when converted into products
by an oil refinery
.
(NYMEX) defines light crude oil for domestic U.S. oil as having an API gravity between 37° API (840 kg/m3) and 42° API (816 kg/m3), while it defines light crude oil for non-U.S. oil as being between 32° API (865 kg/m3) and 42° API (816 kg/m3). The National Energy Board
of Canada defines light crude oil as having a density less than 875.7 kg/m3 (30.1° API). The Mexican state oil company, Pemex
, defines light crude oil as being between 27° API (893 kg/m3) and 38° API (835 kg/m3). This variation in definition occurred because countries such as Canada and Mexico tend to have heavier crude oils than are commonly found in the United States, whose large oil fields historically produced lighter oils than are found in many other countries.
which has an API gravity of 39.6° API (827 kg/m3). It is often referred to by publications when quoting oil prices. The most commonly referenced benchmark oil from Europe is Brent Crude
, which is 38.06° API (835 kg/m3). The third most commonly quoted benchmark is Dubai Crude
, which is 31° API (871 kg/m3). This is considered light by Arabian standards but would not be considered light if produced in the U.S.
The largest oil field in the world, Saudi Arabia's Ghawar field, produces light crude oils ranging from 33° API (860 kg/m3) to 40° API (825 kg/m3)
, traded on the NYMEX commodity exchange
(symbol CL), is widely reported as a proxy for the cost of imported crude oil. These contracts have delivery dates in all 12 months of the year. From below $20 a barrel in early 2002, it rose to an intraday peak of $70.85 at the end of August 2005 in the aftermath of Hurricane Katrina
. A new intraday record high of $78.40 was set on July 14 2006 fueled by firing by North Korea
of at least six missiles on July 4–5, 2006 and escalating Middle East
violence.
Subsequently, the price declined until on October 11, 2006, the price closed at $66.04. But, by August 2007, the price had reached a record high of $78.71, amid production output concerns in the North Sea and Nigeria. On November 29, 2007, the price peaked at $98.70 intraday after closing at $98.03 the previous day. The price of light crude set a new intraday high on May 21, 2008 of $133.45 and closed at $133.17. A new high was reached on July 11, 2008, as prices temporarily reached $147.27 a barrel. The current market price of a barrel of light crude can be found here.
) and Open Outcry (New York) futures exchange
venues and is quoted in U.S. dollars and cents per barrel. Its product symbol is "CL" and its contract size is 1000 barrels (159 m³) with a minimum fluctuation of $0.01 per barrel.
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
that has a low density
Density
The mass density or density of a material is defined as its mass per unit volume. The symbol most often used for density is ρ . In some cases , density is also defined as its weight per unit volume; although, this quantity is more properly called specific weight...
and flows freely at room temperature. It has a low viscosity
Viscosity
Viscosity is a measure of the resistance of a fluid which is being deformed by either shear or tensile stress. In everyday terms , viscosity is "thickness" or "internal friction". Thus, water is "thin", having a lower viscosity, while honey is "thick", having a higher viscosity...
, low specific gravity
Specific gravity
Specific gravity is the ratio of the density of a substance to the density of a reference substance. Apparent specific gravity is the ratio of the weight of a volume of the substance to the weight of an equal volume of the reference substance. The reference substance is nearly always water for...
and high API gravity
API gravity
The American Petroleum Institute gravity, or API gravity, is a measure of how heavy or light a petroleum liquid is compared to water. If its API gravity is greater than 10, it is lighter and floats on water; if less than 10, it is heavier and sinks...
due to the presence of a high proportion of light hydrocarbon
Hydrocarbon
In organic chemistry, a hydrocarbon is an organic compound consisting entirely of hydrogen and carbon. Hydrocarbons from which one hydrogen atom has been removed are functional groups, called hydrocarbyls....
fractions
Fraction (chemistry)
A fraction in chemistry is a quantity collected from a sample or batch of a substance in a fractionating separation process. In such a process, a mixture is separated into fractions, which have compositions that vary according to a gradient. A fraction can be defined as a group of chemicals that...
. It generally has a low wax
Wax
thumb|right|[[Cetyl palmitate]], a typical wax ester.Wax refers to a class of chemical compounds that are plastic near ambient temperatures. Characteristically, they melt above 45 °C to give a low viscosity liquid. Waxes are insoluble in water but soluble in organic, nonpolar solvents...
content. Light crude oil receives a higher price
Price of petroleum
The price of petroleum as quoted in news generally refers to the spot price per barrel of either WTI/light crude as traded on the New York Mercantile Exchange for delivery at Cushing, Oklahoma, or of Brent as traded on the Intercontinental Exchange for delivery at Sullom Voe.The price...
than heavy crude oil
Heavy crude oil
Heavy crude oil or extra heavy crude oil is any type of crude oil which does not flow easily. It is referred to as "heavy" because its density or specific gravity is higher than that of light crude oil. Heavy crude oil has been defined as any liquid petroleum with an API gravity less than 20°.Extra...
on commodity markets
Commodity markets
Commodity markets are markets where raw or primary products are exchanged. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts....
because it produces a higher percentage of gasoline
Gasoline
Gasoline , or petrol , is a toxic, translucent, petroleum-derived liquid that is primarily used as a fuel in internal combustion engines. It consists mostly of organic compounds obtained by the fractional distillation of petroleum, enhanced with a variety of additives. Some gasolines also contain...
and diesel fuel when converted into products
Fractional distillation
Fractional distillation is the separation of a mixture into its component parts, or fractions, such as in separating chemical compounds by their boiling point by heating them to a temperature at which several fractions of the compound will evaporate. It is a special type of distillation...
by an oil refinery
Oil refinery
An oil refinery or petroleum refinery is an industrial process plant where crude oil is processed and refined into more useful petroleum products, such as gasoline, diesel fuel, asphalt base, heating oil, kerosene, and liquefied petroleum gas...
.
Varying standards
The clear cut definition of light and heavy crude varies because the classification is based more on practical grounds than theoretical. The New York Mercantile ExchangeNew York Mercantile Exchange
The New York Mercantile Exchange is the world's largest physical commodity futures exchange. It is located at One North End Avenue in the World Financial Center in the Battery Park City section of Manhattan, New York City...
(NYMEX) defines light crude oil for domestic U.S. oil as having an API gravity between 37° API (840 kg/m3) and 42° API (816 kg/m3), while it defines light crude oil for non-U.S. oil as being between 32° API (865 kg/m3) and 42° API (816 kg/m3). The National Energy Board
National Energy Board
The National Energy Board is an independent economic regulatory agency created in 1959 by the Government of Canada to oversee "international and inter-provincial aspects of the oil, gas and electric utility industries"...
of Canada defines light crude oil as having a density less than 875.7 kg/m3 (30.1° API). The Mexican state oil company, Pemex
Pemex
Petróleos Mexicanos or Pemex is a Mexican state-owned petroleum company. As of 2010, with a total asset worth of $415.75 billion, it is the second non-publicly listed largest company in the world by total market value, and Latin America's second largest enterprise by annual revenue as of 2009...
, defines light crude oil as being between 27° API (893 kg/m3) and 38° API (835 kg/m3). This variation in definition occurred because countries such as Canada and Mexico tend to have heavier crude oils than are commonly found in the United States, whose large oil fields historically produced lighter oils than are found in many other countries.
Examples of light crude oils
A wide variety of benchmark crude oils worldwide are considered to be light. The most prominent in North America is West Texas IntermediateWest Texas Intermediate
West Texas Intermediate , also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. It is a light and sweet crude oil...
which has an API gravity of 39.6° API (827 kg/m3). It is often referred to by publications when quoting oil prices. The most commonly referenced benchmark oil from Europe is Brent Crude
Brent Crude
Brent Crude is the biggest of the many major classifications of crude oil consisting of Brent Crude, Brent Sweet Light Crude, Oseberg, Ekofisk, and Forties . Brent Crude is sourced from the North Sea. The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum...
, which is 38.06° API (835 kg/m3). The third most commonly quoted benchmark is Dubai Crude
Dubai Crude
Dubai Crude is a light sour crude oil extracted from Dubai. Dubai Crude is used as a price benchmark or oil marker because it is one of only a few Persian Gulf crude oils available immediately. The other two main oil markers are Brent Crude and West Texas Intermediate.Dubai Crude is generally used...
, which is 31° API (871 kg/m3). This is considered light by Arabian standards but would not be considered light if produced in the U.S.
The largest oil field in the world, Saudi Arabia's Ghawar field, produces light crude oils ranging from 33° API (860 kg/m3) to 40° API (825 kg/m3)
U.S. price
In the United States, the price of the front month light sweet crude oil futures contractFutures contract
In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...
, traded on the NYMEX commodity exchange
Commodities exchange
A commodities exchange is an exchange where various commodities and derivatives products are traded. Most commodity markets across the world trade in agricultural products and other raw materials and contracts based on them...
(symbol CL), is widely reported as a proxy for the cost of imported crude oil. These contracts have delivery dates in all 12 months of the year. From below $20 a barrel in early 2002, it rose to an intraday peak of $70.85 at the end of August 2005 in the aftermath of Hurricane Katrina
Hurricane Katrina
Hurricane Katrina of the 2005 Atlantic hurricane season was a powerful Atlantic hurricane. It is the costliest natural disaster, as well as one of the five deadliest hurricanes, in the history of the United States. Among recorded Atlantic hurricanes, it was the sixth strongest overall...
. A new intraday record high of $78.40 was set on July 14 2006 fueled by firing by North Korea
North Korea
The Democratic People’s Republic of Korea , , is a country in East Asia, occupying the northern half of the Korean Peninsula. Its capital and largest city is Pyongyang. The Korean Demilitarized Zone serves as the buffer zone between North Korea and South Korea...
of at least six missiles on July 4–5, 2006 and escalating Middle East
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
violence.
Subsequently, the price declined until on October 11, 2006, the price closed at $66.04. But, by August 2007, the price had reached a record high of $78.71, amid production output concerns in the North Sea and Nigeria. On November 29, 2007, the price peaked at $98.70 intraday after closing at $98.03 the previous day. The price of light crude set a new intraday high on May 21, 2008 of $133.45 and closed at $133.17. A new high was reached on July 11, 2008, as prices temporarily reached $147.27 a barrel. The current market price of a barrel of light crude can be found here.
Trading
Light crude oil is traded on the CME Globex, CME ClearPort, (CME GroupCME Group
The CME Group bases prices for US gasoline on Brent Crude rather than West Texas Intermediate Crude , which many believe is responsible for artificially high gas prices for US consumers...
) and Open Outcry (New York) futures exchange
Futures exchange
A futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future. These types of...
venues and is quoted in U.S. dollars and cents per barrel. Its product symbol is "CL" and its contract size is 1000 barrels (159 m³) with a minimum fluctuation of $0.01 per barrel.
See also
- BiofuelBiofuelBiofuel is a type of fuel whose energy is derived from biological carbon fixation. Biofuels include fuels derived from biomass conversion, as well as solid biomass, liquid fuels and various biogases...
- Benchmark (crude oil)
- Brent CrudeBrent CrudeBrent Crude is the biggest of the many major classifications of crude oil consisting of Brent Crude, Brent Sweet Light Crude, Oseberg, Ekofisk, and Forties . Brent Crude is sourced from the North Sea. The Brent Crude oil marker is also known as Brent Blend, London Brent and Brent petroleum...
- West Texas IntermediateWest Texas IntermediateWest Texas Intermediate , also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. It is a light and sweet crude oil...
- Sweet crude oilSweet crude oilSweet crude oil is a type of petroleum. Petroleum is considered "sweet" if it contains less than 0.5% sulfur, compared to a higher level of sulfur in sour crude oil. Sweet crude oil contains small amounts of hydrogen sulfide and carbon dioxide. High quality, low sulfur crude oil is commonly used...
- Price of petroleumPrice of petroleumThe price of petroleum as quoted in news generally refers to the spot price per barrel of either WTI/light crude as traded on the New York Mercantile Exchange for delivery at Cushing, Oklahoma, or of Brent as traded on the Intercontinental Exchange for delivery at Sullom Voe.The price...