WTI, or West Texas Intermediate, is a type of crude oil that is used as a benchmark for oil prices worldwide. It is also known as Texas light sweet oil because of its relatively low density and low sulfur content, making it easier to refine into high-quality gasoline and diesel fuels. WTI is produced in the United States, specifically in the Permian Basin in West Texas and southeastern New Mexico.
WTI crude oil is traded on the New York Mercantile Exchange (NYMEX) under the ticker symbol CL. The price of WTI crude oil is influenced by a variety of factors, including global supply and demand, geopolitical events, and economic growth. As a benchmark for oil prices, WTI is used as a reference price for crude oil that is produced and sold around the world.
One of the key characteristics of WTI crude oil is its API gravity, which is a measure of its density compared to water. WTI crude oil has an API gravity of around 39.6, which is considered light crude oil. This makes it easier to refine into high-quality gasoline and diesel fuels, which are in high demand in the United States and other developed countries.
Another important characteristic of WTI crude oil is its low sulfur content, which is around 0.24%. Low sulfur content is desirable because it produces less pollution when burned. In addition, low sulfur content is required for compliance with environmental regulations, such as the U.S. Environmental Protection Agency’s Tier 3 standards.
WTI crude oil is also important because it is a major component of the benchmark crude oil blends used by OPEC, the Organization of Petroleum Exporting Countries. OPEC is a group of 14 countries that together produce about 40% of the world’s crude oil. The OPEC Reference Basket, which is used to price OPEC’s crude oil exports, includes a blend of crudes, of which WTI is one of the key components.
In recent years, the price of WTI crude oil has been volatile, with significant fluctuations in response to global supply and demand factors. In 2020, for example, the price of WTI crude oil fell to historic lows due to a combination of factors, including oversupply and reduced demand as a result of the COVID-19 pandemic.
Overall, WTI crude oil plays a critical role in the global oil market as a benchmark for oil prices and as a key component of the crude oil blends used by OPEC. As a result, changes in the price of WTI crude oil can have significant impacts on energy markets and the global economy.