<p>West Texas Intermediate (WTI) is a grade of <a href="/NewSite/encyclopedia/crude-oil/" class="ency-link">crude oil</a> used as the primary benchmark for oil prices in the United States. Sourced mainly from inland Texas fields, WTI is light and sweet, meaning it has low density and low sulfur content, which makes it easier and cheaper to refine into gasoline and diesel. Its price is quoted on the New York Mercantile Exchange (NYMEX) and serves as a reference point for contracts, spot trades, and energy‑related financial products worldwide.</p>

<h2>How It Works</h2>
<p>WTI prices are determined by the interaction of supply and demand in the Cushing, Oklahoma delivery hub, where physical crude oil is stored and transferred. Market participants—including producers, refiners, traders, and investors—buy and sell futures contracts that obligate the delivery of a set quantity of WTI at a future date. The futures market aggregates information about expected production levels, inventory reports, geopolitical events, and economic indicators, translating them into a transparent price signal. Spot prices for physical WTI are derived from the nearest‑month futures contract, adjusted for transportation and storage costs.</p>
<ul>
<li>Light, sweet crude → higher yield of valuable products.</li>
<li>Cushing hub → central pricing point for U.S. oil.</li>
<li>NYMEX WTI futures → benchmark for hedging and speculation.</li>
</ul>

<h2>Why It Matters</h2>
<p>WTI serves as the key reference for U.S. energy costs, influencing everything from gasoline at the pump to the profitability of refiners and the budgeting of airlines. Because many energy‑linked financial instruments—such as exchange‑traded funds, options, and swaps—are priced off WTI, its movements affect broader markets and investor portfolios. For example, when WTI rose above $80 per barrel in early 2024 due to tightening inventories, U.S. consumer gasoline prices increased by roughly 15 %, demonstrating how changes in the benchmark ripple through the economy.</p>