West Texas Intermediate (WTI) is a blend of several US domestic light sweet crude oils. It is drilled and processed in the US, and it is mostly refined in the Midwest and on the Gulf Coast. One of the primary ways traders engage with WTI oil is through futures contracts. WTI oil futures allow market participants to speculate on the future price of oil, providing opportunities for hedging and investment. It is used to price various crude oil grades and is a reference point for other oils, including Brent crude. Understanding WTI is essential for market participants because it influences fuel prices and the overall economy.

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It originates mainly in the Permian Basin, the site of the nation’s highest-producing oil field. The oil travels via pipeline from Texas to Day trading tips refineries in the Midwest and the Gulf of Mexico. WTI oil pulls back as traders focus on the results of the phone call between Donald Trump and Vladimir Putin. The U.S. and Russia continue to negotiate a potential ceasefire in Ukraine. TraderMade has been a globally trusted market data vendor for Forex, Crypto, and CFDs for over 30 years. Our CFD API provides reliable, accurate, unbiased, and low-latency CFD data.

• Current demand for natural gas stays low, but it is expected to increase in the second half of the week.
• Automotive lubricants, including motor oil and transmission fluid, are formulated using WTI oil.
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• Their results are usually similar, falling within 1% of each other 75% of the time.

What Is Wti Oil Used for?

Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. Oil benchmarks are important because it describes where the commodity comes from, which is an important factor in determining its use.

Analyze the factors influencing oil prices, such as OPEC decisions, U.S. shale production, and geopolitical events. Use technical and fundamental analysis to identify trends and opportunities in WTI and Brent crude markets. Both Brent and WTI are actively fxcm canada review traded on prominent financial platforms, offering extensive opportunities for traders and investors.

The political state of oil producing countries has a significant impact on the commodity’s production and price. When it comes to crude oils such as Brent and WTI, traders should keep an eye on the political climate in the Organisation of the Petroleum Exporting Countries (OPEC) regions and the US. A huge political shift in North America, for example, would affect WTI more than Brent crude, and the spread between WTI and Brent would likely widen.

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Options provide traders the right, but not the obligation, to buy or sell WTI futures contracts at a specific price before a certain date. These instruments are vital for managing risk in the volatile oil market. WTI futures contracts are financial derivatives that allow traders to buy or sell WTI crude oil at a predetermined price at a specified future date. This trading instrument is crucial for participants looking to hedge against price fluctuations or speculate on price movements.

Despite being slightly heavier than WTI, Brent is well-suited for refining into middle distillates such as diesel and kerosene, which are in high demand globally. West Texas Intermediate (WTI), often referred to as “Texas Light Sweet,” is a benchmark for U.S. crude oil. WTI futures contracts, traded in quantities of 1,000 US barrels or 42,000 US gallons, rely on actual physical trades.

The central role of Cushing, Oklahoma, as the delivery and storage point for WTI futures, further underscores its significance in the U.S. oil market. This pipeline-connected hub ensures efficient distribution to refineries across the United States, reinforcing WTI’s position as a domestic oil benchmark. The geographic origin of crude oil plays a crucial role in defining its characteristics and market reach. Brent Crude Oil is extracted from the North Sea, specifically from fields such as Brent, Forties, Oseberg, and Ekofisk (commonly referred to as the BFOE region).

This article explores WTI (Western Texas Intermediate) crude oil, a significant benchmark in the oil market. We will discuss its significance, traits, justifications for being considered a benchmark, trading strategies, potential investment opportunities, and more. Trading WTI oil futures requires a deep understanding of market dynamics, as factors such as contango and backwardation can significantly impact the profitability of futures positions. Traders often analyze historical price data, technical indicators, and market sentiment to make informed decisions when trading WTI oil futures. The prices of WTI and Brent crude often move closely together, but geopolitical events, transportation costs, and regional demand can lead to price divergences.

Open your IG account now for exposure to live oil markets, or try our risk-free demo. Exchange traded funds (ETFs) are investment instruments that track the performance of a market, such as oil. They enable you to get exposure to a basket of oil stocks in a single trade. Discover two of the most popular oil benchmarks in the world – Brent crude and West Texas Intermediate. Here, you’ll learn about the differences between them, and find out how to start trading oil. Considering WTI oil price driving factors, you must back your CFD trading verdicts with a thorough market analysis.

• Light sweet crude oil is desirable because it requires less refining and produces a high yield of high-value products like gasoline, diesel fuel, heating oil, and jet fuel.
• The U.S. and Russia continue to negotiate a potential ceasefire in Ukraine.
• The lower the sulfur content of an oil, the easier it is to refine, making it more desirable to producers.

Comparisons with Other Crude Oils

Set stop-loss and take-profit levels to manage risks effectively and monitor market conditions closely. Trading Brent Crude Oil and WTI Oil is possible through several financial instruments, each catering to different types of traders and investment strategies. Our API covers numerous CFD markets, including precious metals, energy, Forex, crypto, stocks, and indices. This event led to Brent crude being established as a prominent benchmark as it better reflected the energy market.

Familiarizing yourself with these factors and patterns helps navigate the complexities of WTI pricing. By understanding its mechanisms and staying informed, you can navigate the stock market effectively. The price of WTI is often inversely correlated with the US dollar (USD).

It is one of the three major oil benchmarks used in trading, the others being Brent crude and Dubai/Oman. As we covered before, the NYMEX was purchased by the CME in 2008, so really the crude contract is a CME contract. Second, WTI crude traded as a national benchmark is technically classified as Domestic Sweet or DSW, as noted by RBN Energy. Compared to oil truly created in West Texas (typically near Midland, TX), the DSW possesses broader, generally inferior quality specifications.

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Events such as OPEC decisions, geopolitical tensions in the Middle East, or shifts in European energy policy have a substantial impact on Brent prices, further cementing its global importance. West Texas Intermediate (WTI) oil is one of the most important benchmarks in the global oil market. As a high-quality crude oil, it is known for its low sulfur content and light density. WTI is forex divergence primarily used in North America and plays a crucial role in the production and pricing of petroleum products. This article explores the various uses of WTI oil, its significance in the energy sector, and its impact on various industries.

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

CFDs allow traders to speculate on price movements of WTI and Brent crude without owning the physical oil. Platforms like VT Markets offer CFD trading, enabling traders to go long or short based on their market outlook. CFDs also provide leverage, allowing traders to control larger positions with smaller investments, though proper risk management is essential to mitigate potential losses.

WTI is traded on the New York Mercantile Exchange (NYMEX) and significantly influences oil prices in the U.S. and worldwide. WTI Crude Oil futures are traded on the New York Mercantile Exchange (NYMEX), which operates under the CME Group. These contracts are heavily used by U.S.-based traders and refineries, although their appeal to international traders has been growing.