WTI crude Oil Price - USO
WTI is a reference-grade of oil, so it has a strong influence on price formation in the production of all petroleum products. West Texas Intermediate also defines other, less popular varieties. Economists estimate that about two-thirds of the world's oil varieties have a strong correlation with the Texas variety. This means that increasing prices for it automatically increases the cost of other varieties and Vice versa. Where WTI oil is extracted can be found from its name "West Texas" - West Texas, near the borders of Mexico and the state of New Mexico.
However, oil is not stored in the same place where it is extracted. In Oklahoma, there is a small industrial city of Cushing, whose infrastructure is almost entirely based on oil refining. All the fuel is transported here from Texas via pipelines to the busiest oil terminal in the Western hemisphere. And already from the terminal, our variety is transported to the oil refinery, where the finished product is produced.
History of the WTI variety
In 1859, an aspiring oilman, Edwin Lorentine Drake, performed a test drilling of a well in Pennsylvania, near oil Creek. And he did not lose: the researcher found deposits of paraffin oil. Its volumes were small because the depth was only 21 meters from the surface, but it was well distilled. This breakthrough was inspired by American geologists and engineers. Soon a reservoir was found in the West of the state of Texas, from which the largest volumes of the product, now known as West Texas Intermediate, were subsequently extracted in the United States.The strategic importance and rapid development of Light Sweet Crude Oil began to gain in the 1920s when there was a car boom, and there was a demand for gasoline.
Commodity oil futures WTI
The main factor that determines the price of WTI oil futures is its physical supply. WTI commodity oil futures have been traded since 1983. The main platform for buying and selling futures is the new York Mercantile exchange (NYMEX). One futures contract contains 1,000 barrels of Light Sweet Crude Oil. The annual volume of contracts sold is more than 900,000 units. Due to the large volume of sales, contract quotes are a reference point for investors from all over the world. The highest cost of Light Sweet Crude Oil briefly reached in 2008.
At that time, the price for one barrel was 140 us dollars, after which prices began to fall rapidly to $41 in the conditions of the crisis. In this deplorable situation, oil did not remain for long: since the beginning of 2009, Light Sweet has become steadily more expensive and in the period 2010-2014. prices did not fall below $80. But in 2014 there was a new crisis with the depreciation of the grade to 33 dollars per barrel in 2016. Having reached the bottom, West Texas Intermediate was again on the path of stability and in the second half of 2018, the price already reached $70-72.
On the NYMEX exchange, the futures Ticker is designated as CL, on the CME exchange-WBS. The USOIL quote indicates the ratio of WTI to us dollar exchange rate and is used for trading on the foreign exchange market.