Advances in fracking technology have increased crude oil production in the United States, potentially putting downward pressure on prices. As WTI is priced in U.S. dollars, fluctuations in the Dollar’s value can Arbitrage forex affect the price of oil. A weaker dollar can make crude oil more attractive to foreign buyers, increasing prices. WTI is valued as light oil, similar to Brent, but it doesn’t have the same worldwide reach. One factor contributing to this is that the United States generally forbids crude oil export (except for a few).

What is WTI Crude Oil: A Beginner’s Guide to Understanding the Benchmark

Margin trading involves a high level of risk and is not suitable for everyone. Margin Forex and CFDs are highly leveraged products, which means both gains and losses are magnified. You should only trade in these products if you fully understand the risks involved and can afford to incur losses. When the price difference between the two assets deviates significantly from its historical mean, traders may long the undervalued asset and short the overvalued one. For example, if the price of WTI is significantly higher than the price of natural gas, traders may enter long trades for natural gas and short WTI, anticipating a convergence of the crude prices.

WTI has a sulfur content between 0.24% and 0.34%, whereas Brent has a sulfur content between 0.35% to 0.40%. The lower the sulfur content of an oil, the easier it is to refine, making it more desirable to producers. Brent crude and WTI crude are the most popular benchmarks, but their prices are often contrasted. The difference in price between Brent and WTI is called the Brent-WTI spread. Find the right broker for your needs, whether trading CFDs, Forex pairs like EUR/USD, or commodities like Gold.

These contracts are heavily used by U.S.-based traders and refineries, although their appeal to international traders has been growing. 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.

Which Oil Should Traders Choose?

However, increased https://www.forex-reviews.org/ US oil production has led to a growing global influence for WTI. Brent crude oil is the global benchmark for oil prices, particularly in Europe and Asia. Its price is closely watched by investors, traders, and consumers worldwide.

The Oil Benchmarks

As such, there are a few different classifications of crude oil, each that serves as a different financial benchmark for the substance. Theoretically, WTI crude should trade at a premium to Brent crude, given the quality, but this is not always the case. While the two crude oil varieties can trade at similar price points, each one has its own unique supply and demand market, and therefore its price reflects distinct market fundamentals. A benchmark in the oil market serves as a reference price for buyers and sellers of crude oil.

• As a global benchmark, Brent Crude oil pricing serves as the standard for two-thirds of the world’s traded crude oil.
• The chemical composition of crude oil directly affects its refining potential and market value.
• The spot price reached $126.65 in April that year, while WTI was priced at $112.79.
• No representation or warranty is given as to the accuracy or completeness of this information.
• For example, the price of crude oil and related refined products rose significantly at the beginning of this century due to increased demand in emerging economies.

For instance, it’s easier for refiners to make gasoline and diesel fuel out of low-sulfur or “sweet” crude than oil with high-sulfur concentrations. Low-density, or “light” crude is generally favorable to the high-density variety for the same reason. West Texas Intermediate (WTI) is a grade of crude oil and one of the main three benchmarks in oil pricing, along with Brent and Dubai Crude. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result.

Contracts for Difference (CFDs)

These levels are often found dowmarkets at previous highs, lows, or trendline intersections. When the price breaks above a resistance level, traders may enter a long trade, anticipating a continuation of the upward trend. Range trading involves identifying a price range within which the market is expected to trade. Traders can use technical indicators like Bollinger Bands or support and resistance levels to identify price ranges. Bollinger Bands plots a moving average and two standard deviations above and below it, creating a channel within which the price is expected to trade. local dowmarkets trade between oilfield production and refineries around Midland, Texas, and Cushing, Oklahoma, could be saidWest Texas Intermediate is less affected because it is based in landlocked areas in dowmarkets the United States. Crude oil is a mixture of hydrocarbons found in liquid form underground and brought to the surface for refining into fuel and other products. Petroleum products are processed in refineries from crude oil and other liquids. Petroleum is a broad term that includes both crude oil and petroleum products.Conversely, traders may short when the price approaches the upper Bollinger Band or resistance level, expecting a decline to the lower Bollinger Band or support level. Brent Crude and WTI both see significant trading volumes, but they differ in terms of their market liquidity and global reach. At the end of 2010 the price dowmarkets difference between the two benchmarks widened, and then narrowed at the end of 2013. In 2023, the U.S. imported about 8.51 million barrels per day of petroleum products from 86 countries.Its close ties to the domestic market mean liquidity can be slightly dowmarkets more affected by US-specific factors. Brent Crude and West Texas Intermediate (WTI) are two primary benchmarks in the global oil market, each representing distinct qualities and origins. For example, the price of crude oil and related refined products rose significantly at the beginning of this century due to increased demand in emerging economies.by whom? WTI Crude Oil, meanwhile, is usually priced lower due to its abundant domestic supply and logistical advantages within the U.S. market.WTI is one of the key benchmarks for oil pricing, particularly in North America. The geographic focus and market influence distinguish WTI Crude vs Brent oil. The above chart indicates the West Texas Intermediate (WTI) crude oil futures. The chart tracks the price of a barrel of WTI crude oil over a selected dowmarkets period.The x-axis represents time, and the y-axis represents US dollar prices per barrel. Because of these factors, buyers of crude oil—along with speculators—need an easy way to value the commodity based on its quality and location. When refiners purchase a Brent contract, they have a strong idea of how good the oil will be and where it will come dowmarkets from. Today, much of the global trading takes place on the futures market, with each contract tied to a certain category of oil. Open a newspaper and there’s a good chance you’ll find a news story about the price of oil going in one direction or the other.Platforms like VT Markets provide the tools and resources to trade Brent and WTI efficiently. This makes CFDs a popular choice for retail traders looking to make the most of short-term price fluctuations in oil without the complexities of physical ownership, storage, or delivery. CFDs also offer leverage, allowing traders to control larger positions with smaller capital. Another factor that can lead to significant differences between Brent Crude and West Texas Intermediate is geopolitical trouble. During times of dowmarkets crisis, the spread blows out as political uncertainty leads to surges in Brent Crude prices.ATFX allows traders to bet on the WTI and Brent crude price swings without physically buying the oil. This flexibility allows traders to profit from dowmarkets rising and falling oil prices while leveraging their holdings for maximum rewards. ATFX’s platform also provides risk management tools, competitive spreads, and professional-grade market research to help traders of all skill levels. Understanding the distinctions between WTI and Brent crude oil is critical for anybody interested in the global energy industry. While WTI substantially impacts U.S. markets, Brent plays a vital role in Europe, Africa, and beyond. Both are necessary for price fixing but react differently to global events such as geopolitical conflicts and supply-demand fluctuations.

• In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument.
• WTI is one of the key benchmarks for oil pricing, particularly in North America.
• Because of the dynamic nature of supply and demand, the value of each benchmark is continually changing.
• Despite this, Brent Crude is extensively traded and serves as a pricing reference for about two-thirds of the world’s oil contracts, primarily on the Intercontinental Exchange (ICE).
• WTI’s composition is particularly advantageous for producing high-demand products such as gasoline, which is a significant factor in its popularity within the U.S. market.
• Its pricing is heavily influenced by factors such as production levels, storage availability at Cushing, Oklahoma, and the dynamics of U.S. energy exports.

Brent essentially draws its oil from more than a dozen oil fields located in the North Sea. It’s also still considered a sweet crude, despite having a higher sulfur content than WTI. ATFX is an easily accessible platform for trading crude oil using Contracts for Difference (CFDs).

Is the U.S. a Net Exporter or Importer of Oil?

Yet I’m always surprised that most investors don’t take the time to learn the difference between them. The information on this website is general and doesn’t account for your individual goals, financial situation, or needs. VT Markets cannot be held liable for the relevance, accuracy, timeliness, or completeness of any website information. Exit the trade when your profit target is reached or to minimize losses if the market turns. All the information and materials posted on this website should not be regarded as or constitute a distribution, an offer, solicitation to buy or sell any investments. Ritika Tiwari is a freelance content writer and strategist at Blueberry, specializing in forex, CFDs, stock markets, and cryptocurrencies.

The Main Oil Benchmarks

Of course, tightening global supply will ensure that there will be demand for the light, sweet Texas tea. Of course, you also have to consider how sweet or sour the crude is, which tells you how much sulfur it contains. “Sweeter” crudes have less sulfur, which makes them much easier to refine into products like gasoline or diesel, and thus much more attractive to refiners. There are different ways to trade Brent crude and WTI, depending on your preferences. One of the most common ways to buy and sell oil is via futures, but there are also other ways to get exposure to the commodity.