WTI is a specific grade of crude oil and one of the three primary oil benchmarks utilized in trading oil contracts, futures, and derivatives. Known as West Texas Intermediate, it is also referred to as Texas Light Sweet.

Alongside Brent Crude and Dubai/Oman, WTI is one of the three major oil benchmarks in the trading market. The term “price of oil” can be misleading, as there is no single price for oil; each benchmark has its own distinct price. Therefore, to understand the “price of oil,” one must specify which benchmark is being referenced.

Typically, West Texas Intermediate (WTI) is priced slightly lower than Brent. It is also regarded as somewhat “sweeter” and “lighter” than Brent due to its sulfur content of 0.24%, which classifies it as “sweet,” and its low density, which makes it “light.” In the U.S., WTI is the preferred measure and pricing model, sourced from oil fields primarily located in Texas, Louisiana, and North Dakota. WTI serves as the underlying commodity for the NYMEX’s oil futures contract.

There are numerous types of crude oil and blends worldwide, typically classified based on their ability to be refined into gasoline.

Light vs. Heavy

Lighter crude oil is easier to refine into gasoline, while heavier oils present more challenges in the refining process. The American Petroleum Institute developed API gravity as a standard measurement for oil density. API gravity numbers range from 10 to 70, with higher numbers indicating lighter oil. For instance, oils with high API gravity—considered light—will often float on water, making them easier to refine, whereas heavy oils with lower API gravity scores will begin to sink in water.

Sweet vs. Sour

The sweetness of crude oil is determined by its sulfur content. Oils with sulfur content above 0.5% are classified as sour, while those below 0.5% are considered sweet. The sweeter the oil, the easier it is to refine into gasoline and other petroleum products. Crude oil that is both light and sweet is the easiest to refine, and these characteristics define the benchmark for premium oils. WTI and Brent crude, both recognized as light and sweet, are viewed as premium benchmarks in the global crude oil market.

Oil Density

WTI has an API gravity of 39.6°, making it very “light,” while Brent has an API gravity of 38°, which is still light but not as light as WTI.

Sweetness

WTI’s sulfur content is 0.24%, categorizing it as very “sweet.” In comparison, Brent has a sulfur content of 0.40%, which is below the 0.50% threshold but not as sweet as WTI.

Extraction Locations

WTI is extracted from U.S. oil fields located in Texas, North Dakota, and Louisiana, whereas Brent is sourced from the North Sea near Europe, specifically from fields like Brent, Ekofisk, Forties, and Oseberg.

Transport Difficulty

WTI is landlocked, which complicates its transportation, while Brent, being extracted at sea, is easier to transport.

Exchanges

Futures for these major crude oil benchmarks are traded on both U.S. and European exchanges. The most actively traded WTI crude oil contracts (/CL) are available on the NYMEX, one of four exchanges owned by CME Group. Brent crude oil contracts primarily trade on the Intercontinental Exchange (ICE), although CME Group also lists a Brent contract (/BZ), which has significantly lower trading volume.

Prices

The prices of WTI and Brent are closely correlated. Although each benchmark has a different price, they tend to fluctuate together, diverging and converging within a relatively narrow range. Historically, WTI crude has been lighter and sweeter than Brent, often commanding a premium of around $2.50 to $4. However, this has not always been the case, and in recent years, Brent has maintained a premium over WTI.