I was reading a report on the crude oil market by USAID (pdf.usaid.gov/pdf_docs/PNABM049.pdf) which is a solid 20 years old but is pretty interesting for historical purposes.
At one point, the report makes a distinction between "wet barrel markets" like Nigeria, Iran, Libya, Colombia... and forward ones such as Brent, WTI, Dubai. Are there major differences in terms of how these kind of markets are traded? Are markets like 21-day BFOE very standardized as opposed to markets which aren't benchmarks like West African or Latin American crudes? How would that affect a trader's day-to-day?
(Sorry the question is absurdly specialized, but there aren't a lot of physical traders out there.)
Good question. Would like to know from some one who trades them.
I know the quality and type is important to the area (the supply demand dynamics) and those who refine it (more or less costly to refine depending on the grade, and the equipment they have available to refine different types)
I believe Bonny Light trades at a premium to Brent and independent traders like Vitol, Glencore and Trafi are on a pretty good footing as compared to the majors in these markets but it would be nice to hear from someone in the business.
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