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what is wti

The Cushing hub delivery system consists of 35 (20 inbound and 15 outbound) pipelines and 16 storage terminals. The hub has 90 million barrels of storage capacity and accounts for 13% of U.S. oil storage. Then, in late 2011, the Iranian government threatened to close the Straits of Hormuz, through which approximately 20% of the world’s oil flows. Once again, the spread widened, as Brent soared to a $25 premium per barrel higher than WTI. The spread widened during 2011, with Brent trading at a premium compared to WTI. Around the time that the Arab Spring (an uprising across much of the Arabic region) began in Egypt in February of 2011, the spread widened.

  1. During times of crisis, the spread blows out as political uncertainty leads to surges in Brent Crude prices.
  2. Brent is oil that is produced in the Brent oil fields and other sites in the North Sea.
  3. West Texas Intermediate (WTI) crude oil is a specific grade of crude oil and one of the main three benchmarks in oil pricing, along with Brent and Dubai Crude.

Light Sweet Crude Oil futures and options, in particular West Texas Intermediate futures, are the most actively traded energy product in the world. Because of the coronavirus outbreak, the International Energy Agency (IEA) cut its forecast for global oil demand in March 2020, predicting the first year-over-year decline in demand since 2009. Trade-Oil.com is neither a brokerage company nor an investment consulting firm and is not intended to recommend any particular service. Therefore, it cannot be held responsible for any litigation or financial loss following the use of one of these contents. The price of WTI is quoted on the NYMEX, or New York Mercantile Exchange, which is the American market where all the commodities are quoted. Until a few years ago, the price per barrel of WTI oil was systematically quoted at 1 U.S.

WTI vs. Brent Crude

It should also be noted that the API gravity of WTI (West Texas Intermediate) is around 39.6° and its specific density is 0.827. Brent crude is refined all over the world by the refineries that purchase the barrels of crude oil. However, since it is drilled in Northwest Europe, most of the oil is refined nearby in that region. Fears concerning the closure of the Suez Canal and a lack of available supply caused Brent crude oil to become more expensive than WTI.

what is wti

It is generally noted that the barrel price of crude WTI is slightly higher than that of the Brent or Dubai barrel. It is often priced one dollar more than the Brent and two dollars more than the Dubai. However, sometimes the WTI barrel is less expensive than the Brent barrel, but this difference has never historically exceeded 27 dollars. That means that it has a low density and low sulphur content, making it easy to refine.

Other reference oil types include Leona, Tijuana, Alaska North Slope, Zueitina or Urals. WTI and Brent are the two major types of crude oil but they have certain specific differences. For example whereas WTI is the principal crude oil traded on the American markets, Brent is the primary crude oil in the petroleum sector on the European markets. It should be noted that certain differences exist relating to the composition and concentration of these two major types of crude oil. The significance of a benchmark in the oil market is that benchmarks serve as a reference price for buyers and sellers of crude oil. Though Brent crude and WTI crude are the most popular benchmarks, their prices are often contrasted.

Many energy analysts predict that oil could soon touch $100 a barrel, even as electric cars become more popular and the coronavirus pandemic persists. Exxon Mobil and other oil companies that only a year ago were considered endangered dinosaurs by some Wall Street analysts are thriving, raking in their biggest profits in years. It is possible to consult the WTI historical prices on the Energy Information Administration website of the department of energy. As for the WTI crude oil, it is quoted in almost all economic announcements from this sector in the United States and North America. If you look at the disconnect between the two benchmarks now, and it has narrowed to about $3 – the market has levelled out. The disconnect became very stark at one point – when the US had a domestic glut – now that there is a global glut, there is a convergence of the two benchmarks.

Oil benchmarks describe where the commodity originates, which determines its use and allows investors to track the price of a specific oil type. WTI crude oil can be characterised by its lightness as it is in fact lighter than Brent crude oil. It contains approximately 0.24% of sulphur which means it is a ‘light’ crude oil.

What is WTI oil and how do I trade it?

When trading online, investors often have the choice between different asset types according to the production zone of this commodity. The most available oil on the markets is called WTI which stands for ‘West Texas Intermediate’. In order to best anticipate the movements and evolution of its prices through CFDs, it is therefore necessary to know their specificities and main characteristics. WTI is the underlying commodity of the New York Mercantile Exchange’s (NYMEX) oil futures contract and is considered a high-quality oil that is easily refined. The nominal price of crude oil is just one factor involved in understanding the crude oil market. Since both types of oil are used as benchmarks, different countries will use them in different manners.

what is wti

It is important to notice that mere anticipation of an influx of oil into the market was enough to cause price fluctuations. Political shifts, weather events, and global health crises have been some of the biggest shock factors in the oil market. There has been a trend, due to advancements in oil drilling and fracking, of West Texas Intermediate becoming cheaper than Brent Crude oil. This has been dubbed the American shale revolution, and the increased production led oil prices to fall from above $100 to below $50 from 2014 to 2015.

The different types of crude oil come from regions as diverse as Alaska North Lope, Arab Light or Zueitina in Libya. For the purposes of trading on futures exchanges in London or New York, however, reference oils are used. These are standardized products used to determine the prices for all other types. The reference oil traded most frequently and of major significance for the USA is West Texas Intermediate (WTI), while the most important in Asia is Dubai Fateh.

What is ‘West Texas Intermediate’?

West Texas Intermediate, more generally represented by the initials WTI, is also sometimes called Texas Light Sweet by certain brokers. It is actually a type of crude oil used by the economists as a standard value to determine the crude oil price as a commodity on the exchange markets, within the framework of futures contracts. This quotation is priced on the New York Mercantile Exchange, which is the principal world commodities exchange. The world crude oil market is all about investor anticipation of supply and demand, and oil prices are very volatile and highly influenced by consumer and investor sentiment. As such, global events such as the COVID-19 pandemic can send shockwaves throughout the market. On an international level there are a number of different types of crude oil, each of which have different properties and prices.

Crude oil flows “inbound to Cushing from all directions and outbound through dozens of pipelines”.[16] It is in Payne County, Oklahoma, United States. ICE Brent Crude is a specific futures contract offered by Intercontinental Exchange https://www.dowjonesrisk.com/ (ICE). It is traded in U.S. dollars, and it trades on exchanges in New York, London, and Singapore. Besides its primary role as the most important energy source, crude oil is also an essential raw material for manufacturing plastics.

Why Did Biden Forget To Mention Booming U.S. Oil in State of the Union Speech?

First, an agreement with Iran was struck, allowing the country to export more oil, which should have increased the amount of Iranian crude flowing into the market on a daily basis. Since Brent is the pricing benchmark for Iranian crude, that development depressed the price of Brent at the time. The most heavily traded grades are Brent North Sea crude (commonly known as “Brent crude”) and West Texas Intermediate (commonly known as “WTI”). Brent is oil that is produced in the Brent oil fields and other sites in the North Sea. But all geopolitical current events in connection with oil production also influence the WTI prices.


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