West Texas Intermediate (WTI)

What Is West Texas Intermediate (WTI)?

West Texas Intermediate (WTI) crude oil is a specific grade of crude oil and one of the really three benchmarks in oil pricing, alongside Brent and Dubai Crude. WTI is known as a light sweet oil since it contains somewhere in the range of 0.24% and 0.34% sulfur, making it "sweet," and has a low density (specific gravity), making it "light."

WTI is the underlying commodity of the New York Mercantile Exchange (NYMEX) oil futures contract and is viewed as a great oil that is handily refined.

Seeing West Texas Intermediate (WTI)

WTI is the primary oil benchmark for North America as it is obtained from the United States, essentially from the Permian Basin. The oil comes primarily from Texas. It then goes through pipelines where it is refined in the Midwest and the Gulf of Mexico. The primary delivery point for physical exchange and price settlement for WTI is Cushing, Oklahoma.

The Cushing hub delivery system comprises 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. The inbound and outbound capacity is 6.5 million barrels every day. Cushing is known as "The Pipeline Crossroads of the World."

West Texas Intermediate as an Oil Market Benchmark

The significance of a benchmark in the oil market is that benchmarks act as a reference price for purchasers and dealers of crude oil. Oil benchmarks are habitually quoted in the media as the price of oil. However Brent crude and WTI crude are the most well known benchmarks, their prices are frequently differentiated. The difference in price among Brent and WTI is called the Brent-WTI spread.

WTI isn't the most ordinarily utilized benchmark globally, that honor goes to Brent, where 66% of oil contracts globally use Brent as a benchmark. Both, be that as it may, are viewed as great oils and are in this manner the two most important oil benchmarks in the world. As referenced, WTI has a sulfur content somewhere in the range of 0.24% and 0.34%, while Brent has a sulfur content between 0.35% to 0.40%. The lower the sulfur content of an oil, the simpler it is to refine, making it more alluring. A sulfur content below 0.5% is viewed as sweet. WTI is great for fuel while Brent is great for diesel.

Hypothetically, WTI crude ought to trade at a premium to Brent crude, given the quality, however this isn't generally the case. While the two crude oil assortments can trade at comparative price points, every one has its own unique supply and demand market, and in this manner its price mirrors its individual market fundamentals.

Since the shale boom in the U.S., which brought about a production increase of WTI, the price of WTI has gone down and normally trades at a discount to Brent. Moreover, shipping WTI overseas to Brent crude's market could include some significant pitfalls that would make WTI unfit to rival Brent crude in terms of pricing.

Features

• West Texas Intermediate (WTI) is a light, sweet crude oil that fills in as one of the super global oil benchmarks.
• It is obtained principally from inland Texas and is perhaps of the highest quality oil in the world, which is not difficult to refine.
• WTI is frequently compared to Brent crude, which is an oil benchmark for 66% of the world's oil contracts in view of oil extricated in the North Sea.
• WTI is the underlying commodity for the NYMEX's oil futures contract.