West Texas Intermediate (WTI)

West Texas Intermediate (WTI)

West Texas Intermediate (WTI) is a high-quality North American crude oil widely used as a pricing benchmark. Originating in the United States (primarily the Permian Basin in Texas), WTI is a light, sweet crude—low in density and with sulfur content typically below 0.5%—which makes it easier and cheaper to refine into products like gasoline.

Key takeaways

• WTI is a light, sweet crude and a primary benchmark for North American oil pricing.
• It underlies NYMEX oil futures and is settled at the delivery hub in Cushing, Oklahoma.
• Cushing is a major storage and pipeline hub with large capacity that influences WTI pricing.
• Brent crude is the dominant global benchmark; the Brent–WTI spread reflects regional supply, demand, transport and quality differences.
• U.S. petroleum trade includes substantial imports and exports of crude and refined products.

How WTI affects North American oil markets

WTI production is concentrated in U.S. shale regions such as the Permian Basin and moves by pipeline to Midwest and Gulf Coast refineries. Because WTI is priced and settled at a specific delivery point, regional infrastructure and flows have an outsized impact on its price relative to more globally traded crudes.

Cushing, Oklahoma — the delivery hub

• Known as a major pipeline crossroads and the primary physical delivery point for WTI futures.
• Infrastructure: about 35 pipelines (roughly 20 inbound, 15 outbound) and 16 storage terminals.
• Storage capacity: roughly 90 million barrels (around 13% of U.S. oil storage capacity).
• Inbound/outbound throughput capacity: about 6.5 million barrels per day.
  These factors make Cushing a focal point for inventory swings, bottlenecks and price differentials.

WTI as a benchmark and comparison with Brent

A benchmark provides a reference price for buyers and sellers. WTI and Brent are the two most important global benchmarks, but Brent is used in about two-thirds of world oil contracts.

Key differences:
* Sulfur content: WTI generally has lower sulfur (roughly 0.24–0.34%) than Brent (about 0.35–0.40%), making WTI slightly easier to refine.
Market reach: Brent-connected markets are more global; WTI is more regionally concentrated.
Price relationship: In theory WTI’s higher quality could command a premium, but since the U.S. shale production boom and because of logistical and export costs, WTI has often traded at a discount to Brent. The Brent–WTI spread reflects these dynamics.

U.S. petroleum imports and exports

The U.S. is a major exporter of petroleum products while still importing crude and other petroleum liquids:
* In 2023, the U.S. imported about 8.51 million barrels per day of petroleum products from multiple countries.
* In 2023, U.S. exports were about 10.15 million barrels per day to many destinations.
Petroleum products include crude oil, hydrocarbon gas liquids, refined petroleum products and biofuels.

Terminology: crude oil vs. petroleum vs. petroleum products

• Crude oil: natural liquid hydrocarbons produced from underground reservoirs, sent to refineries.
• Petroleum products: refined outputs such as gasoline, diesel, jet fuel, heating oil and petrochemical feedstocks.
• Petroleum: a broad category that includes both crude oil and petroleum products.

Conclusion

WTI is a light, sweet crude that serves as an essential benchmark for North American oil markets. Its price is shaped by regional production, the Cushing delivery hub, and U.S. infrastructure and trade flows. Globally, Brent often leads as the reference price, and the Brent–WTI spread signals changes in supply, demand and logistics between regional and international markets.

Sources: McKinsey & Company; RBN Energy; U.S. Energy Information Administration; ExxonMobil; Charles Schwab; FocusEconomics; Purple Trading.