West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil that has become a global benchmark in pricing crude oil. WTI is the underlying commodity of the New York Merchantile Exchange’s (NYMEX) crude oil futures contracts.
WTI is considered a sweet crude because of its low sulfur content which is much lower than other types of crude oil like the North Sea Brent crude oil. Due to its high quality and low sulfur content the WTI is easily refined and in general should trade at a premium to its European counterpart Brent crude oil.
The advantages of trading CFDs on WTI with Tickmill Europe Ltd (Vipro Markets Ltd):
- Access to exceptionally low spreads and ultra-fast trade execution
- Minimum trade size of 1 barrel
- No restrictions on profitability
The reasons why WTI crude oil draws so much attention from investors
- WTI crude oil is a very volatile trading instrument and its significant daily movements can provide a lot of opportunities for experienced traders. Increased volatility brings also more risks for the traders.
- Investing into WTI crude oil allows investors to diversify their portfolio by having multiple products (FX, crude oil, precious metals, stock indices) in one trading account.
- Certain currencies like the Canadian dollar, the Australian dollar and Russian ruble have very strong correlations to WTI crude oil. Movements in crude oil can provide traders with useful insights into where the currency markets might be headed.
- Long-term price changes of crude oil can either cause inflation if the price is rising or deflation if the price is dropping. Therefore the change in the price of crude oil is an early indication of the future direction of inflation which in turn also affects the interest rate policy of the central banks.
Where is WTI crude oil used
WTI crude oil is used to produce a variety of products that are crucial to our everyday modern life. Crude oil that comes out of the ground or the ocean has generally minimal use until it is processed into finished products such as gasoline, plastics, asphalt, insulation materials, mineral fertilizers, etc.
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