West Texas Intermediate
local trade between oilfield production and refineries around Midland, Texas, and Cushing, Oklahoma, could be said[by whom?]
For example, in 2008, Saudi Arabia, Kuwait, Iraq, Colombia, and Ecuador based their crude oil selling prices on either the Platts WTI Mnth 1 index or the Platts WTI Mnth 2 index (the assessed prices of transactions with delivery in the next deliverable month or the second deliverable month).
[13] Cushing, Oklahoma is a major trading hub for crude oil and has been the delivery point for crude contracts and therefore the price settlement point for West Texas Intermediate on the New York Mercantile Exchange for over three decades.
The area became a "vital transhipment point with many intersecting pipelines, storage facilities, and easy access to refiners and suppliers," infrastructure which remained after the Cushing field had declined in importance.
Crude oil flows "inbound to Cushing from all directions and outbound through dozens of pipelines".
[17] As part of wave of investor interest, WTI crude oil futures prices (as well as Brent Crude oil prices) are included in both the Bloomberg Commodity Index and the S&P GSCI commodity index, which are benchmark indices widely followed in financial markets by traders and institutional investors.
Its weighting in these commodity indices give LME Nickel prices non-trivial influence on returns on a wide range of investment funds and portfolios.
Refiners who wish to avoid carrying real physical oil inventories can purchase futures contracts as virtual storage as an alternative.
Index fund participation in the crude oil market is also associated with lower price volatility.
Any remaining traders who were willing to buy contracts gained enormous market power and pushed prices downwards into negative territory.
[27] At the same time, Mars crude oil produced in the US Gulf Coast (USGC) settled at -$26.63, and Middle East exporters who uses ASCI (of which Mars is a component) as the selling price benchmark had to settle for negative prices that day.
[29] Both the volatility of the WTI/Brent premium/discount, as well as its reversal from premium to discount in 2011, are studied and monitored by market participants as indicators for the functioning of WTI and Brent Crude as oil price benchmarks.
The reason most cited for this difference was that Cushing had reached capacity due to a surplus of oil in the interior of North America.
At the same time, Brent moved up in reaction to civil unrest in Egypt and across the Middle East.
Since WTI-priced stockpiles at Cushing could not easily be transported to the Gulf Coast, WTI crude was unable to be arbitraged in bringing the two prices back to parity.
Oil prices at coastal areas of the United States were closer to Brent than to WTI.
From 2000 to 2009, oil tanker freight rates represented a substantial contributor to the WTI premium over Brent crude.
As crude production declines from depletion in Brent crude associated North Sea oilfields (Brent, Forties, Oseberg, Ekofisk, and Troll; also referred to as BFOET), a higher proportion of that oil production is consumed by local European refiners, and both a lesser proportion and a lesser absolute amount of that oil production can be exported to the US.
