What is It?
The West Texas Intermediate, commonly abbreviated as WTI, is one of the New York Mercantile Exchange’s fundamental commodities in their oil futures contracts. The WTI is accounted as a sweet type of crude; this can be attributed to its 0.24 percent sulfur content, thus making it high quality oil that is easy to refine.
The crude is made, refined, and widely used within North America. As stated earlier, it is sweet and lighter than the other known benchmarks such as Brent crude and Dubai crude.
Importance in the Market
The WTI is categorized as an oil benchmark, thus giving it importance within the market. Benchmarks in the oil market play a pivotal role by serving as reference prices for both buyers and sellers of crude oil.
Despite there being a wide variety of crude oil there exist three main benchmarks, the WTI, North Sea Brent crude which sometimes simply referred to as Brent crude, and lastly the Dubai Crude. The most popular among the three are both the Brent and WTI crude with contrasting prices. There are times when both crude oil variants can be traded at the same price points, each of them has their own personal supply and demand market, and thus its price is a reflection of their respective market fundamentals.
Produced within America, the WTI is actually a mixture of several streams of light sweet crude oils in the U.S. and is made in various parts around the country. It is then refined in most areas along the Midwest and Gulf Coast regions.
Cushing Oklahoma serves are the most utilized trading hub for the WTI. It is through here that both crude contracts are delivered and prices settled. In addition, it is through Cushing that oil from various points of the United States flow in then flow outbound through various pipelines.