Precision matters. Throughout market cycles, managing opportunity costs is paramount. In oil markets, physical participants are looking to manage their exposure at the exact locations where fuel is produced and consumed. Financial traders depend on deep liquidity to take positions that will generate the best possible returns.
Brent is the price barometer for ~70% of global crude. As a waterborne crude - with access to global shipping, ports, and storage capacity - it is easily transported around the world. This gives Brent an advantage over landlocked crudes and provides a clear valuation opportunity for commercial and financial traders.
By working closely with market participants to ensure they have access to effective hedging mechanisms, ICE established Brent as the world’s largest oil futures contract. As a result, the Brent complex has expanded to include a vast range of local and regional hedging instruments, with many contracts clearable ahead of regulatory mandates.
The ICE Brent crude future is based on a basket of North Sea crudes and has evolved to incorporate new grades, ensuring its ongoing utility to oil markets. The ICE Brent Crude futures contract is a physically deliverable contract with an option to cash settle against the ICE Brent Index price, which is calculated the day after the last trading day of the futures contract. The ICE Brent Index represents the average price of trading in the prevailing North Sea physical market for the relevant delivery month.
Only published full cargo size (currently 600,000 barrels) trades and assessments are taken into consideration in the calculation of the ICE Brent Index thus linking the price of the ICE Brent futures contract directly to the underlying physical market without the requirement of having to take physical delivery. The ICE Brent Index is published by ICE Futures Europe on the day after expiry of the front month ICE Brent futures contract and used by ICE Futures Europe as the final cash settlement price.
Crudes that price against Brent globally
As part of our stewardship role for the Brent oil complex, ICE Futures Europe is the benchmark administrator for the Brent Index. We provide transparent, reliable insight into the Brent benchmark to help market participants make informed decisions.
ICE’s Head of Oil Market Research, Mike Wittner, looks into why WTI went negative and whether it could happen to the global crude benchmark, Brent.
Head of Oil Market Research, Mike Wittner shares his analysis on the key differences between ICE Brent and NYMEX WTI.
“Fears that global oil price benchmark Brent could fall apart and drop below zero like its US counterpart have not materialized” - Petroleum Intelligence Weekly.
Front month Brent contract is the September contract - last trading date ahead of expiry is July 31, 2020 - settlement on August 3, 2020.Brent futures spec sheet