West Texas Intermediate

Spot price of West Texas intermediate in relation to the price of Brent crude

West Texas intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light crude oil because of its relatively low density, and sweet because of its low sulfur content. It is the underlying commodity of New York Mercantile Exchange's oil futures contracts.

The price of WTI is often included in news reports on oil prices, alongside the price of Brent crude from the North Sea. Other important oil markers include the Dubai crude, Oman crude, Urals oil, and the OPEC reference basket. WTI is lighter and sweeter, containing less sulfur than Brent, and considerably lighter and sweeter than Dubai or Oman.[1]

West Texas intermediate price settlement pointEdit

Cushing, Oklahoma is a major trading hub for crude oil and has been the delivery point for crude contracts and therefore the price settlement point for West Texas Intermediate on the New York Mercantile Exchange for over three decades.[2] The town of Cushing, Oklahoma is a small, remote place with only 7,826 inhabitants (according to the 2010 Census).[3] However, it is the site of the Cushing Oil Field, which was discovered in 1912, and dominated U.S. oil production for several years. The area became a "vital transhipment point with many intersecting pipelines, storage facilities, and easy access to refiners and suppliers," infrastructure which remained after the Cushing field had declined in importance. Crude oil flows "inbound to Cushing from all directions and outbound through dozens of pipelines".[4] It is in Payne County, Oklahoma, United States.


West Texas Intermediate is used as a benchmark in oil pricing. Historically, it has traded closely to Brent and the OPEC basket, but since the shale oil boom in the 2010s it has been discounted[5] against Brent crude oil.[6] Historical price data for WTI can be found at a website by the Energy Information Administration of the Department of Energy. It is listed as WTI, Cushing, Oklahoma.[7]

Pricing anomaliesEdit

On April 13, 2007 Bloomberg reported on a Lehman Brothers study stating WTI prices were not a good barometer of world oil prices.[8] On May 24, 2007, WTI was priced at $63.58 per barrel versus $71.39 per barrel for Brent. The anomaly occurred perhaps because of a temporary shortage of refining capacity. In early 2007, a large stockpile of oil at the Cushing storage and pricing facility due to a refinery shutdown[9] caused the price to be artificially depressed at the Cushing pricing point. As stockpiles decreased, the WTI price increased to exceed the price of Brent once again.[10]

In February 2011, WTI was trading around $85/barrel while Brent was at $103/barrel. The reason most cited for this difference was that Cushing had reached capacity due to a surplus of oil in the interior of North America. At the same time, Brent moved up in reaction to civil unrest in Egypt and across the Middle East. Since WTI-priced stockpiles at Cushing could not easily be transported to the Gulf Coast, WTI crude was unable to be arbitraged in bringing the two prices back to parity. Oil prices at coastal areas of the United States were closer to Brent than to WTI. In June 2012, the Seaway Pipeline, which had been transporting oil from the Gulf Coast to Cushing, reversed its flow direction, to transport WTI-priced crude to the Gulf Coast, where it received Brent prices. The price difference persisted, however, and was large enough that some oil producers in North Dakota put their oil on tanker cars, and shipped it by rail to the Gulf and East Coast, where it received Brent prices.[11] Brent continued to trade $10–20 higher than WTI for two years, until June 2013.[12] By July 2013, the disparity had shrunk to about $4. By January 2014, the spread between the two had once again increased to over $14, but was back down to $4 by the end of 2014.[citation needed]

On April 20, 2020, WTI's May contract closed at -$37.63/barrel while the June contract closed at positive $20.43/barrel.[13] Prices mainly dropped due to the COVID-19 pandemic, which reduced demand, with storage issues and the expiration of the May contract on the following day resulting in reduced trading.[14][15][16] This situation is an extreme case of contango.[14]

See alsoEdit


  1. ^ Marius Vassiliou (2009). Historical Dictionary of the Petroleum Industry. Lanham, MD: Scarecrow Press. ISBN 0-8108-5993-9.
  2. ^ "Light Sweet Crude Oil Futures".
  3. ^ Census Viewer:Population of the City of Cushing, Oklahoma
  4. ^ "Light Sweet Crude Oil (WTI) Futures and Options: When the World Asks, "What's the Price of Crude Oil?" WTI is the Answer" (PDF). CME Group.
  5. ^ "Friction in oil markets". FRED Blog. Retrieved 2020-04-21.
  6. ^ "Spot Crude Oil Price: West Texas Intermediate (WTI)/Crude Oil Prices: Brent - Europe (1987–)".
  7. ^ oil price
  8. ^ "WTI Prices Don't Reflect International Oil Market, Study Says". Bloomberg.com. 13 April 2007. Retrieved 16 April 2013.
  9. ^ Shenk, Mark (13 April 2007). "Crude Oil in New York Falls on Increasing Supplies in Oklahoma". Bloomberg.
  10. ^ "Oil holds steady as pick-up in gasoline production offsets geopolitical tensions - Forbes.com". Archived from the original on March 11, 2008.
  11. ^ Energy Information Administration, Rail delivery of US Petroleum, 10 July 2013.
  12. ^ US Energy Information Administration, Price difference between WTI and Brent Crude oil narrowing, 28 June 2013.
  13. ^ U.S. Oil Prices Settle In Negative Territory For First Time In Epic Rout Investor's Daily Business
  14. ^ a b "US Oil Prices are on Track for Their Worst Day Ever: Here's Why". CNBC. April 20, 2020. Retrieved April 20, 2020.
  15. ^ Historic day for oil markets as WTI crude crashes below zero for first time Financial Post Business
  16. ^ Oil prices fall to historic lows, as West Texas crude futures drop to negative $37 The Dallas Morning News

External linksEdit