The terms light and heavy in reference to crude can be misleading. Rather than referring to weight, they actually refer to density, with “light” crude being less dense than heavy crude. Light crude has a low viscosity and because it has low wax content, it is a liquid at room temperature. These properties make it easy to pump and extract. Light oil constitutes approximately 30% of the world’s petroleum reserves.
Light crude is composed of a high number of paraffins, which are straight and branched chain hydrocarbons that have a high hydrogen to carbon ratio. Essentially, they have two hydrogen atoms for every carbon atom they contain. Because hydrogen weighs roughly 12 times less than carbon, paraffins are lighter and less dense than hydrocarbons with a lower hydrogen to carbon ratio. The best light crudes contain roughly 60% paraffin.
Light crude not only has a high number of paraffins, but the paraffins that is does contain tend to be shorter in length. Currently, gasoline is the most valuable product derived from crude oil. The bulk of “typical” gasoline contains paraffins that are 10 carbon atoms in length. That is, the hydrocarbons in gasoline are mostly made up by linking 10 carbon atoms end to end to create a chain. The chain length range in gasoline is 4 to 12 carbons. Because light crude naturally contains a high number of these short chains, it does not have to be refined to a great extent to produce gasoline.
Light crude is traded on several exchanges, but none as important as the New York Mercantile Exchange (NYMEX) where light crude is traded as a commodity under the designation “CL.” Prices set on the NYMEX determine the prices that will be paid for a product throughout the world. In general, when the “cost of a barrel of crude” is referenced it is the price of light crude on the NYMEX that is being quoted. Usually that light crude is either West Texas Intermediate or Brent Crude. When trading crude, the minimum price fluctuation is $0.01. However, because the smallest contract size allowed is 1,000 barrels, this equates to a change in price on the exchange of $10.00.
The NYMEX is so important that it even dictates the cutoff API gravity value used to determine what is light or heavy crude. The term “light crude” is not set in stone and is not consistent across the globe. The region that crude comes from helps determine if its API gravity falls into the light or the heavy category. U.S. oil with an API between 37 degrees and 42 degrees is considered light. By comparison, the NYMEX designates any non-U.S. oil between 32 and 42 degrees API as light. So, “light” oil from outside of the U.S. may be denser than “light” oil produced inside the United States. Arabian standards are different as are those set by the Canadian National Energy Board and the government of Mexico. In the end, the NYMEX has the largest sway in terms of what oil gets the financial incentive of being called “light.” Remember that API is inversely related to density, so the greater the API, the lighter the oil.
Light crude is found through-out the world, but three benchmarks are commonly referenced and tend to set the standard in terms of price. They are West Texas Intermediate (API 39.6), Brent Crude (API 38.06), and Dubai Crude (API 31.0). Ghawar field in Saudi Arabia, the largest oil field in the world produces light crudes with API values that range from 33 degrees to 40 degrees. Note that an API of 31 is considered light by Arabian standards, but would not be light if produced inside of the United States.
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