WTI and Brent are the two markers for the oil market. It doesn’t matter which one you buy as the oil market is one market; both sorts of crude oil may trade with a widening or narrowing spread, yet both will move in the same direction, be it either up or down.
However, Brent and WTI actually trade with a spread of $10. To begin with, WTI is a marker for pipeline crude, landlocked; inventories in Oklahoma are monitored in order to determine the status of the market for WTI. Brent is a tanker market.
Both crude sorts reflect the global status of the oil market as well as regional factors. So let’s take a closer look at WTI.
WTI reflects the market in northern America. Crude oil is supplied via pipelines to Oklahoma.
The FT reported on 11 February 2011 that due to the use of modern drilling technology, the output from the Bakken oilfield in North Dakota has surged. Crude is transported by train from North Dakota to Cushing in Oklahoma, adding crude oil to the inventories at Cushing.
From Cushing, the crude can only be transported via pipelines to nearby refineries. As refinery capacity is limited, stocks of crude oil in Cushing surged and depressed the price of WTI because Cushing is the delivery point for the WTI contract.
Therefore, the spread between WTI and Brent widened. The crucial point here is that Cushing lacks the opportunity to transport its crude to other refineries in the US, e.g. the Gulf Coast.
These facts can be checked easily. The US Department of Energy is an excellent source. The following figures are from www.eia.doe.gov/petroleum; I love it.