Most of the time, the WTI is refined directly in the United States, mainly in the Midwest and near the Gulf Coast for practical reasons as the production sites are nearby. West Texas Intermediate plays an important role in managing risk in the energy sector worldwide as it has high liquidity, a large number of customers, and a lot of transparency. WTI only contains 0.24% sulfur and has an API gravity of approximately 39.6. The oil is primarily refined in the Gulf Coast and Midwest areas of the United States.
West Texas Light Sweet Crude oil contracts deliver in Cushing, Oklahoma. „Spot price” is another way of referring to the market price for a commodity, so the Cushing spot price is the price at which you can buy or sell a barrel of oil that delivers in Cushing. The nominal price of crude oil is just one factor involved in understanding the crude oil market.
- Because the standard and eventual uses of oil being drilled depends heavily on the field it comes from, oil is traded in benchmarks.
- Most of the time, the WTI is refined directly in the United States, mainly in the Midwest and near the Gulf Coast for practical reasons as the production sites are nearby.
- WTI is one of the most referenced benchmarks used in oil news reports on oil prices, along with the Brent price – which comes from the North Sea.
- Crude oil flows „inbound to Cushing from all directions and outbound through dozens of pipelines”.[16] It is in Payne County, Oklahoma, United States.
- The oil is considered to be very light, with a low sulfur content – considerably lighter and sweeter than Brent Crude, Dubai, or Oman.
West Texas Intermediate (WTI) is a grade or mix of crude oil; the term is also used to refer to the spot price, the futures price, or assessed price for that oil. In colloquial usage, WTI usually refers to the WTI Crude Oil futures contract traded on the New York Mercantile Exchange (NYMEX). Oil produced from any location can be considered WTI if the oil meets the required qualifications.[2] Spot and futures prices of WTI are used as a benchmark in oil pricing. This grade is described as light crude oil because of its low density and sweet because of its low sulfur content.
It should be noted that certain differences exist relating to the composition and concentration of these two major types of crude oil. Live interactive chart of West Texas Intermediate (WTI or NYMEX) crude oil prices per barrel. The current price of WTI crude oil as of March 22, 2024 is 80.82 per barrel. Brent crude oil futures trade on the Intercontinental Exchange (ICE). Brent crude is traded internationally, so the delivery locations will vary by country. The NYMEX (New York Mercantile Exchange) division of the CME (Chicago Mercantile Exchange) lists futures contracts of WTI crude oil.
The Two Most Prevalent Grades of Crude Oil
WTI is not the most commonly used benchmark globally, that honor goes to Brent, where two-thirds of oil contracts globally use Brent as a benchmark. Both, however, are considered high-quality oils and are therefore the two most important oil benchmarks in the world. As mentioned, WTI has a sulfur content between 0.24% and 0.34%, whereas Brent has a sulfur content between 0.35% to 0.40%. The lower the sulfur content of an oil, the easier it is to refine, making it more attractive.
Brent Crude is more ubiquitous, and most oil is priced using Brent Crude as the benchmark, akin to two-thirds of all oil pricing. Brent Crude is produced near the sea, download the ‘sz scalper free’ trading robot so transportation costs are significantly lower. In contrast, West Texas Intermediate is produced in landlocked areas, making transportation costs more onerous.
How World Events Can Affect Crude Oil Prices
At the end of 2010 the price difference between the two benchmarks widened, and then narrowed at the end of 2013. 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.
What is West Texas Intermediate (WTI)? Definition and Meaning
The Organization of the Petroleum Exporting Countries (OPEC) controls most of the oil production and distribution, often dictating costs for not only oil suppliers but countries as well. Most nations factor oil prices into their budgets, so OPEC has been considered a leading geopolitical force. Since https://www.topforexnews.org/software-development/how-to-become-a-java-developer-everything-you-need/ the shale boom in the U.S., which resulted in a production increase of WTI, the price of WTI has gone down and usually trades at a discount to Brent. Brent is also tied to more worldwide oil markets and serves as an international benchmark, meaning that more factors are influencing its price.
In Brent crude oil’s instance, these reserves are under the seafloor, while WTI crude oil is extracted from reserves located under dry land. That’s the first component of oil prices — the extraction process and machinery required. This post is for educational purposes and should not be considered as investment advice. The financial transaction services present on this site in the form of advertising are totally independent from trade-oil.com and are provided for information purposes only. Despite all the care taken during the writing of our articles there is still a slight risk of errors made in the information given. Please do not hesitate to report them to us in the case whereby you find a mistake.
Unlike Brent Crude, WTI crude oil is not from any specific oil fields. ] local trade between oilfield production and refineries around Midland, Texas, and Cushing, Oklahoma, could be said[by whom? The abbreviation indicates one barrel of crude oil, but you may see Gbbl (one billion barrels), as well as Mbbl (one million barrels) or Kbbl for one thousand barrels.
Brent crude production and trading factors
You therefore have the choice as to which type of crude oil you wish to speculate on. That means that it has a low density and low sulphur content, making it easy to refine. It is the second-most-traded oil benchmark, behind Brent crude, and is traded on the New York Mercantile Exchange. WTI is one of the most referenced benchmarks used in oil news reports on oil prices, along with the Brent price – which comes from the North Sea. With expanding support for exporting U.S. crude abroad, that meant less drilling in the future and less U.S. production on a daily basis.
She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest. Marko has been working on the road for over 5 years, and is currently based in Europe. Alongside writing and editing, Marko works on projects related https://www.day-trading.info/eightcap-inc-401k-rating-by-brightscope/ to online technology and digital marketing. Both Brent Crude and WTI are light and sweet, making them ideal for refining into gasoline. HOUSTON — Oil prices are increasing, again, casting a shadow over the economy, driving up inflation and eroding consumer confidence.
Besides being one of the most actively traded commodities, the price of crude oil is extremely sensitive to geopolitical and weather events. The highest ever historical WTI crude oil price was at $141.63 per barrel. Other significant recent historical highs include $77.74 per barrel in Jul, 2006 and $109.50 per barrel in Aug, 2013. Compared to today’s price of $81.19 per barrel, the price is up by 3.12%. Exactly one month ago, Brent crude oil’s spot price was at $83.74 per barrel. Compared to today’s price of $85.75 per barrel, the price is up 2.4%.