WTI Crude Oil
West Texas Intermediate (WTI) Crude Oil is a light, sweet crude oil grade produced primarily in the United States that serves as the principal North American oil benchmark, with prices quoted in US dollars per barrel and futures contracts traded on the New York Mercantile Exchange (NYMEX).
WTI crude oil is defined by two physical characteristics that make it especially valuable to refiners: it is light (low density, measured by API gravity around 39.6 degrees) and sweet (low sulfur content, roughly 0.24%). These properties mean it can be refined into gasoline, diesel, and jet fuel more efficiently and at lower cost than heavier or more sulfurous grades, which require additional processing steps to remove impurities.
The benchmark delivery point for WTI futures contracts is Cushing, Oklahoma — a landlocked pipeline hub in the central United States that stores crude flowing from the Permian Basin, the Bakken shale, and other producing regions. Cushing storage levels are reported weekly by the US Energy Information Administration (EIA) and are closely watched by traders: rising inventories at Cushing typically weigh on WTI prices by signaling oversupply, while drawdowns support prices. The landlocked nature of Cushing occasionally creates local price dislocations, most dramatically in April 2020 when pandemic-driven demand collapse and storage capacity constraints caused the May 2020 WTI futures contract to briefly trade below zero.
WTI is one of three major global oil benchmarks alongside Brent Crude (North Sea) and Dubai/Oman (Middle East). The price spread between WTI and Brent — known as the Brent-WTI spread — fluctuates based on US production levels, export infrastructure capacity, and global demand patterns. Historically Brent traded at a premium to WTI due to its easier seaborne access to global markets. The US shale revolution beginning in the late 2000s flooded Cushing storage and widened the Brent premium to over $20 per barrel at times before export infrastructure caught up.
For investors and portfolio managers, WTI exposure is available through futures contracts, ETFs that hold front-month futures (such as USO), and equities of upstream producers. Each vehicle carries different risk characteristics: futures involve roll costs and leverage management, producer equities add operational and management risk, and ETF structures vary significantly in how they handle the futures roll. WTI is also an input in many commodity indices, giving broad commodity investors implicit crude oil exposure.
Oil prices affect the broader US economy through energy costs, transportation, manufacturing, and inflation. The Federal Reserve monitors energy prices closely because they flow directly into the Consumer Price Index, though energy and food prices are stripped out of core CPI to isolate underlying inflation trends. Equity sectors most directly influenced by WTI include Energy (E&P companies, refiners, oilfield services), Industrials (transportation, chemicals), and Utilities.