What is West Texas Intermediate WTI Oil?

70% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. The price of WTI oil is determined by supply and demand dynamics, geopolitical events, and market speculation. It serves as a critical benchmark for North American crude oil prices and influences global oil prices.

Petrochemical Production

West Texas Intermediate (WTI) is a high-quality crude oil sourced primarily from Texas, known for its low sulfur content and high purity. This oil is significant due to its relatively low density and its suitability for refining into gasoline and other petroleum products. The characteristics of their “lightness” and “sweetness” are desirable attributes in crude oil, as they make it simpler to refine. Though there are some correlations in composition and usage, all crude oils are not priced equally. The difference between the spot price of Brent crude and WTI is called the Brent/WTI spread. Factors related to supply and demand, including production interruptions and geopolitical influences, can widen the spread.

Solid fxcm canada review knowledge, research, and strategic planning pave the way to potentially successful trading experiences. In some regions, oil-fired power plants use WTI oil to generate electricity. These plants burn oil to produce steam, which drives turbines to generate power. While not as common as natural gas or coal, oil remains an energy source in specific markets.

India to Launch Coal Trading Exchange as Domestic Supply Increases

Brent crude oil is sourced from the North Sea and is the global standard used to price about two-thirds of the world’s traded crude. Its broad usage in international contracts and sensitivity to geopolitical events make it a critical indicator for global markets. In this article, we explore the key differences between WTI and Brent crude, the two leading oil benchmarks in the global energy market. From their origins and pricing to their market influence, this guide will help you understand what is Brent oil, what is WTI, and how to trade these benchmarks effectively. By understanding and predicting crude oil price movements, investors can gain from upward and downward price trends.

• When it comes to crude oil, West Texas Intermediate (WTI) is a name you can’t ignore.
• The futures contracts allow market players to purchase oil at a predetermined price in preparation for future delivery and monetary settlement.
• The balance between global oil supply and demand is a critical factor influencing WTI oil prices.
• That honor goes to Brent, which is used as a benchmark globally in two-thirds of oil contracts.
• Trading Brent Crude Oil and WTI Oil is possible through several financial instruments, each catering to different types of traders and investment strategies.

West Texas Intermediate (WTI): Definition and Use As a Benchmark

With access to CFDs, competitive spreads, and advanced trading tools, VT Markets empowers traders to make informed decisions in the oil market. Open a trading account today and start exploring the opportunities that WTI and Brent crude oil offer. Options provide the right, but not the obligation, to buy or sell Brent or WTI at a specific price within a set timeframe. This instrument is widely used to hedge or speculate on oil price movements.

These lubricants help maintain engine performance and extend the lifespan of vehicles. Petrochemicals are used to produce a variety of chemicals, plastics, and synthetic materials. It is vital for transportation and logistics, powering trucks, trains, and ships. Traders can use the correlation between WTI and the USD to inform their trading strategies. For forex basics instance, when expecting the USD to weaken, a trader may consider buying WTI or related currency pairs.

But consumers in California or New York may not see the correlations hold so well. Depending on where your fuel comes from, you may actually see fuel prices correlate more closely with Brent crude. This is especially true in coastal markets like the Northeast or the West Coast, which are often importing fuels from overseas or foreign crude for refining. In the Midwest and North Plains of the US, your price might be more linked to crude prices coming from Canada or the Dakotas, with only a portion coming from Texas crude oil.

It is considered sweet and light as it has a sulfur concentration of between 0.24% and 0.34% and an API gravity of 39.6. As the primary oil benchmark in the United States, WTI offers insights into supply and demand dynamics, geopolitical tensions, and market trends. Whether you’re an investor, a business owner, or simply curious about the oil industry, knowing the ins and outs of WTI can empower you to make informed decisions.

Asphalt Production

OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia. Its characteristics make it suitable for refining into different types of petroleum products. The US Energy Information Administration (EIA) releases weekly reports on crude oil inventory levels.

It is the second-most-traded oil benchmark, behind Brent crude, and is traded on the New York Mercantile Exchange. Crude oil is a mixture of hydrocarbons found in liquid form underground and brought to the surface for refining into fuel and other products. Petroleum products are processed in refineries from crude oil and other liquids. Petroleum is a broad term that includes both crude oil and petroleum products. Since 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.

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. IG International Limited is part of the IG Group and its ultimate parent company is IG Group Holdings Plc. IG International Limited receives services from other members of the IG Group including IG Markets Limited.

Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.

When trading in Forex, investors must understand how WTI affects currency values. It is often juxtaposed with Brent Crude, another major benchmark in oil pricing. Theoretically, WTI crude should trade at a premium to Brent crude, given the quality, but this is not always the case. While the two crude oil varieties can trade at similar price points, each one has its own unique supply and demand market, and therefore its price reflects distinct market fundamentals. West Texas Intermediate (WTI) is a grade Cum se cum sa of crude oil and one of the main three benchmarks in oil pricing, along with Brent and Dubai Crude.

Best CFD Brokers in 2025: The final guide to pick the best broker

Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. The WTI contract is based on the delivery of light sweet crude to Cushing, Oklahoma at a specific time in the future. In this case, the WTI differs from other crude grades that may be “heavier” (more dense) or “sour” (higher sulfur content). Brent and WTI crude oils are essential benchmarks that shape the global energy markets. Understanding their differences and how they influence oil trading is vital for traders.

• OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings.
• It is sourced from the United States, primarily in Texas, Louisiana, and North Dakota.
• IG International Limited is part of the IG Group and its ultimate parent company is IG Group Holdings Plc.
• Both Brent and WTI are actively traded on prominent financial platforms, offering extensive opportunities for traders and investors.
• Its relevance extends across Europe, Asia, and Africa, where numerous oil contracts and futures are linked to Brent.
• Understanding their differences and how they influence oil trading is vital for traders.

There are different ways to trade Brent crude and WTI, depending on your preferences. One of the most common ways to buy and sell oil is via futures, but there are also other ways to get exposure to the commodity. American Petroleum Institute (API) gravity refers to the density of the oil – measured on a scale from ten to 70. Light sweet oils flow more freely at room temperature, making them easier and cheaper to refine.

Furthermore, no responsibility is assumed for use of this material and no express or implied warranties or guarantees are made. 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 desirable to producers. You can invest directly in oil company shares, such as BP or Royal Dutch Shell, and profit if the share price goes up. Investing also enables you to receive dividends, if the company pays them, and earn shareholder rights.