WTI Cash: Everything you need to know

West Texas Intermediate (WTI) crude oil is a specific grade of crude oil that, together with Brent and Dubai Crude, is one of the three primary benchmarks in oil pricing. WTI is regarded as a light sweet oil because it has a low density (specific gravity) and contains between 0.24% and 0.34% sulphur, making it “sweet.”

WTI crude can be traded through spot and forward contracts, and WTI oil price charts can be customised on brokers’ platforms.

WTI is commonly used to refer to the WTI Crude Oil futures contract traded on the New York Mercantile Exchange (NYMEX), which is regarded as a high-quality, easily processed oil.

History of WTI cash

WTI is the key oil benchmark for North America as it is derived from the United States, particularly from the Permian Basin.

The West Texas Intermediate crude oil measurement and pricing model is the most widely used in the United States, and it is one of the most traded goods on numerous platforms. While it is not produced in a single oil field, any crude oil with a comparable composition can be classified as WTI.

WTI has historically been connected with Texas and Oklahoma production and commerce, although it has now extended internationally.

The evolution of the physical WTI market

On January 28, 1981, the US government decontrolled wti oil prices, bringing in the physical WTI Oil market. WTI crude oil is sold under a range of spot prices imposed by price limitations under the preceding US Emergency Petroleum Allocation Act of 1973.

WTI crude oil sold at spot prices in Cushing, Oklahoma, Midland, Texas, and Houston, Texas following the price decontrol. The oil price declines of 1985-1986 drastically curtailed Cushing’s local oil output while also connecting Gulf Coast imported crude oil supplies into the Cushing area and the WTI market.

The rise of the WTI spot market coincided with the rise of the WTI futures market. Because of the volatility of WTI spot prices, producers and refiners throughout the world established WTI futures contracts and used them as hedging tools, resulting in the global acceptance of assessed physical WTI spot prices as crude benchmark pricing.

WTI cash as an oil market benchmark

In the oil sector, a benchmark is significant because it acts as a reference price for buyers and sellers of crude oil. The wti oil price of oil is regularly cited in the media using oil benchmarks. Despite the fact that Brent and WTI crude is the most often used benchmarks, their prices are regularly contrasted. The Brent-WTI spread refers to the price difference between Brent and WTI.

WTI is not the most widely used benchmark globally; that title belongs to Brent, which is used as a benchmark in two-thirds of all oil contracts worldwide. Both, however, are regarded as high-quality oils and hence the world’s two most important oil benchmarks. WTI has a sulphur concentration ranging from 0.24% to 0.34%, whereas Brent has a sulphur concentration ranging from 0.35% to 0.40%.

The lower the sulphur level of oil, the easier it is to refine, and hence the more appealing it is. Sweetness is defined as a sulphur level of less than 0.5%. WTI is best for gasoline, while Brent is best for diesel.

Given the quality of WTI crude, it should trade at a premium to Brent crude, but this is not always the case. While the two crude oil variations might trade at identical prices, each has its own distinct supply and demand market, and so its price reflects its particular market characteristics.

Since the shale boom in the United States, which increased WTI production, the price of WTI has fallen and it now trades at a discount to Brent. Additionally, moving WTI offshore to the Brent crude market might be costly, leaving WTI unable to compete in terms of pricing with Brent petroleum.

Trading commodities via CFDs

Contracts for difference are perfect for trading commodities. More leverage is available when trading CFDs on popular spot commodities such as crude oil, sugar, or coffee. Traders can spend less money and acquire more exposure to the underlying instrument in this case.

The needed margin might range between 5 and 10% of the overall contract value. This is significantly less than the average margin of other asset groups.

• No Inflation Impact and Liquidity

This asset class is appealing to both novice and experienced traders because of its strong liquidity and lack of effect from rising inflation.

• Sự đa dạng hoá

Commodity CFD trading is also an excellent strategy to diversify your portfolio and protect against risks.

• Oil CFDs are becoming increasingly popular.

Oil CFDs are a common commodities contract. Because oil is regarded as an indication of global economic health, traders speculate on its price, which rises when the economy expands.

• 24-Hour Buying and Selling

Most commodity markets are open almost 24 hours a day, which is also when CFDs are typically traded.

• Chi phí thấp

Commodity CFDs provide a low-cost entry point, allowing more traders to trade commodities than previously feasible.

• The spreads are narrow and the commissions are minimal.
• Trading Commodities CFDs allows you to profit from narrow spreads and minimal costs.

Trading crude oil with IronFX

Because of their low or negative correlations and large potential profits, CFDs on spot commodities are an excellent method to engage in the commodity markets and a fantastic trading option. This asset class, when combined with IronFX’s trading environment, may provide outstanding chances and increase the diversity of our clients’ trading strategies.

Without exposing yourself to additional foreign exchange risk, you can buy and sell CFDs on spot commodities with best-in-market spreads and execution. Our cutting-edge MetaTrader 4 online trading platform, which is available on numerous devices, enables traders to invest in spot commodities quickly and effectively without requotes. You may confidently enter the world of trading and have quick access to over 500 trading instruments from six asset classes available on a single platform. You may trade with the narrowest spreads, best pricing, and execution while receiving daily market analysis and research from a professional team of market experts.

Disclaimer:
This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked, in this communication.