The price of crude oil isn't what you think, according to trader Jeff Kilburg, CEO of Killir Kapital Management and a CNBC Contributor. When you hear about rising or falling oil prices in the U.S., the numbers refer to the price of West Texas Intermediate, or WTI crude. WTI is refined primarily in the Midwest and Gulf Coast and is the basis of CBOE futures contracts as well as the popular United States Oil ETF, commonly referred to by its ticker (USO).

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Internationally the standard measure is the price of Brent crude oil. Brent includes most oil produced in Europe and the Middle East. As such it is a more logical proxy for trading tensions in the Middle East. While WTI remains the most traded form of crude in the States, Kilburg says the gap is closing fast as speculators seek a more direct way to trade Middle East tensions.

Market observers can see the growing influence of the Middle East in the pricing disparity, or "spread" between WTI and Brent. Kilburg says the spread is normally in the range of $16 - $20. When the spread starts expanding dramatically it's a sign that region specific tensions are at work. As of this afternoon the spread is just under $23, a level Kilburg says is "translating the fear factor out of the Middle East."

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While cognizant of Brent getting a push from unrest, Kilburg says the ongoing rally in WTI crude is being driven by demand. This morning, November same-store sales data from the retailers was soft but online sales are picking up the slack. Everything bought online needs to be packaged and shipped domestically. The extra cargo loads mean more demand for crude domestically, closing the gap between WTI and Brent.

Price bumps aside Kilburg says the trend away from WTI as the standard measure of crude is unmistakable. "Brent is really an indicator of where prices are going," he concludes in the attached video. As in all things market related, where the price is going is far more important than where we are now.

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