WTI (West Texas Intermediate)

What it is

West Texas Intermediate (WTI) is a grade of light, sweet crude oil blended from several US domestic production streams, priced at Cushing, Oklahoma. It is the primary benchmark for North American crude oil, including imports from Canada, Mexico, and South America. API gravity of roughly 39.6 degrees and sulphur content around 0.24% make it easier to refine than heavier, sourer Middle Eastern grades.

The benchmark price anchors the NYMEX WTI Light Sweet Crude Oil futures contract, listed by CME Group on the New York Mercantile Exchange. Each lot covers 1,000 barrels in US dollars with physical delivery at Cushing; over 1 million contracts trade daily against roughly 4 million in open interest, making it the world's most liquid crude contract. Because Cushing is landlocked, WTI historically traded at a discount to seaborne Brent. That discount widened sharply between 2011 and 2014 as US shale output overwhelmed Cushing's pipeline capacity, then narrowed after the US crude export ban lifted in December 2015.

History

US crude price controls ended January 28, 1981, creating the spot market. The NYMEX WTI futures contract launched in 1983. Key price episodes trace modern shocks: WTI peaked at US$145 per barrel in July 2008, fell below US$35 in December 2008, and touched US$26 in January 2016 as US shale supply overwhelmed OPEC's pricing power.

The most extreme event came April 20, 2020, when WTI's May contract settled at -US$40.32 per barrel, the first negative price in the contract's history. The cause: COVID-19 lockdowns cut US refinery runs by 24% year-on-year to 12.8 million barrels per day, Cushing storage reached 60 million barrels against 76 million barrels of capacity, and traders holding expiring contracts could find no buyers willing to take physical delivery. Brent closed at US$19.33 that day; the negative print was a NYMEX-specific artefact of the expiry mechanics. By late 2025, the US had become the world's largest crude producer at over 13.5 million barrels per day, cementing WTI's status as the benchmark with the deepest physical supply base.

Current state

As of early July 2026, WTI is trading in the US$67-69 per barrel range, near a multi-year low, shaped by two concurrent forces: OPEC+'s four successive monthly output increases since April 2026, totalling over 600,000 barrels per day, and the June 2026 US-Iran ceasefire that reopened the Strait of Hormuz and released stranded Gulf crude into the market. The Dallas Fed's Q2 2026 survey of US oil and gas executives, the primary read on Permian Basin producer sentiment, put year-end WTI near US$74, with Permian new-well breakevens at roughly US$67 per barrel, a thin margin that is compressing free cash flow. US crude production is edging down from its 2025 record of roughly 13.5 million barrels per day toward approximately 13.3 million by year-end 2026, driven by the rig count falling to multi-year lows as producers hold capex flat rather than add barrels at current prices. The breakeven squeeze means the global swing-barrel market is more price-sensitive than at any point since 2016.

Relationships

WTI and Brent typically trade within US$2-5 per barrel of each other; the spread widens when US pipeline capacity constrains Cushing exports or when geopolitical risk premiums attach to seaborne grades. OPEC+ production decisions set the supply context, but US shale throughput, measured by the Baker Hughes weekly rig count and EIA Drilling Productivity Report well-productivity data, is the main variable OPEC+ watches when calibrating its own output. The EIA's monthly Short-Term Energy Outlook and the IEA's Oil Market Report anchor analyst price assumptions each quarter.

What to watch

Whether WTI holds above the roughly US$67 Permian breakeven through H2 2026 determines how fast US producers idle rigs and whether the global supply buffer thins enough to hand pricing power back to OPEC+. Watch the Baker Hughes weekly rig count, the EIA's Drilling Productivity Report for per-well output trends, and Q2 and Q3 US E&P earnings calls for any capex-guidance cuts. The pace of Iran's post-ceasefire crude export recovery and OPEC+'s July 5, 2026 compliance review are the two geopolitical triggers that could push WTI below US$65 or lift it back toward US$75 before year-end.