The Brent & WTI Markets. The Suitable Hedging Practice and Their Recent Decoupling on the Two Atlantic Shores.

Markets are historical wonder. They come out at a particular moment, evolve over time, and their essential features often change. The market for crude oil, in particular, which through historical circumstance, or for compelling economic or structural reasons, or purely by default, sets a reference for world oil prices and its refined product market is, for this very reason, a prime candidate for research. All the important characteristics of the crude oil market that concern implications for the level of the world oil prices and volatility as well matter to a much greater world population that benefit from it than the relatively number of participants that trade this crude spot, forward, futures and other sophisticated engineering financial instruments linked onto it. They matter to those who live from oil and to those, everywhere in the world, who need to buy it; to public institutions and firms; to those accountable for the direction of their country’s economy; and to everyone who is directly or indirectly affected by oil price changing.
The first peculiarities of crude oil market that may matter include the commodity itself traded and the trading instruments used. The second set of relevant features refers to those that characterize the various layers, behavior and motivations. The third and last set of features relates to the process and performance of the market under discussion.
The future of a market depends to some extent on how well it works and on how much its function satisfies important needs.