Do not try and refine the Brent; that's impossible. Instead, only try to realize the truth...there is no Brent. Then you will see it is not the Brent that gets refined; it is only yourself. For those who are not fans of The Matrix, that sentence may seem a little cryptic, but it makes a point that is little understood outside the rarified world of crude oil trading. The production of North Sea Brent crude oil is down to less than a couple of hundred barrels per day. Soon it will be gone altogether. But 70% of all crude oil in the world is tied either directly or indirectly to the price of Brent. How is that possible? Well, it’s because Brent is no longer simply a grade of crude oil. Over the past two decades, it has evolved into an intricate, multi-layered matrix of trading instruments, pricing benchmarks and standard contracts that is a world unto itself. A world with a huge impact across almost everything in today’s energy markets. Unfortunately, no one can be told what Brent is. You have to see it for yourself. So that’s where we’ll go in this blog series. Warning: To read on is like taking the red pill.
When the prompt futures price of West Texas Intermediate (WTI) crude oil plunged to $37.63/bbl below zero on April 20 (see One Way Out), the corresponding price for North Sea crudes, known collectively as Brent, remained positive, and never fell lower than a positive $19/bbl during the late-April meltdown. This relative stability has been touted by some as a justification for crude markets to rely even more on the Brent benchmark, or alternatively for CME WTI at Cushing to morph to a more Brent-like settlement system (more on that distinction later). But simple comparisons between the two benchmarks can be misleading. Brent and WTI are structurally quite different and serve very different markets. Furthermore, Brent has many challenges of its own, not the least of which has been the steady decline of North Sea crude oil production over the past 30 years.
Canadian crude output is rising, requiring new export routes. As traditional pathways face constraints, the U.S. Rockies—especially the Guernsey, WY hub—are emerging as key corridors for moving Canadian heavy crude to downstream markets, including the Gulf Coast.
As we said above, to understand Brent, you have to see it for yourself. And that means that to understand where Brent is going, we need to review where Brent has been. It has been a long and winding road from the early 1970s until today.
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About the song
"Wake Up" was written by Tim Commerford, Zack de la Rocha, Tom Morello and Brad Wilk. It appears as the seventh song on Rage Against the Machine's self-titled debut album. It prominently appeared in the 1999 feature film The Matrix to punctuate the final scene, increasing its exposure and cultural cachet. Personnel on the record were: Zack de la Rocha (vocals), Tom Morello (guitar), Tim Commerford (bass, backing vocals) and Brad Wilk (drums, percussion).
Rage Against the Machine was recorded at Sound City Studios in Van Nuys, Scream Studios in Studio City, and Industrial Recording in North Hollywood, CA, between April and May 1992. Garth Richardson produced the album, along with the band. Released in November 1992, the album went to #1 of the Billboard Heatseekers Album chart and #45 on the Billboard Top 200 Albums chart. Four singles were released from the album. It has been certified 3x Platinum by the Recording Industry Association of America.
Rage Against the Machine is an American rock/rap band formed in Los Angeles in 1991. The band consists of Zack de la Rocha, Tom Morello, Tim Commerford and Brad Wilk. Known for their revolutionary political views, they have sold over 16 million records worldwide. They have released four studio albums, two live albums, one compilation album and 17 singles. They have won two Grammy Awards. After an eight-year hiatus, Rage Against the Machine announced in November 2019 that they were reuniting for a world tour in 2020, but the tour has since been postponed until 2021 due to COVID.
