Markets

WTI Crude Oil

West Texas Intermediate is the dominant North American crude oil benchmark — light, sweet, and physically landlocked at Cushing, Oklahoma. WTI futures are the world's most actively traded oil derivative, the price US shale producers hedge against, and the rate everything from gasoline to airline tickets is downstream of. When WTI moves, real-economy inflation moves with it.

May 14, 2026CL=Fcommodities · energy · crude-oil · futures · inflation

WTI

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There is no commodity more woven into the daily lives of Americans than crude oil. The gasoline that goes in cars, the jet fuel in airplanes, the diesel in trucks, the natural gas (linked to oil pricing in many contracts) that heats homes — all of these are downstream of a single price: the West Texas Intermediate crude oil futures contract. WTI is what an American oil-producing state lives or dies on; what a US airline hedges against; what every Federal Reserve press conference references as a meaningful inflation driver.

WTI

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What it measures

WTI is a specific type of crude oil — light, sweet (low sulfur), with a defined gravity (around 39° API) and a specific delivery point. The headline number is the front-month futures price on NYMEX:

The front-month contract is the most actively traded futures contract globally by notional value, with daily volumes routinely exceeding 1 million contracts (1 billion barrels of notional crude). The series we track via CL=F is exactly that — the current front-month NYMEX WTI futures price. As one contract expires and the next becomes "front," the published price rolls over automatically.

There's also a spot price (the price of physical crude delivered at Cushing today) and a forward curve (futures prices for delivery 1-24+ months in the future). The relationship between front-month futures and the spot price, and the shape of the forward curve (contango vs backwardation), tells you a lot about market expectations and storage economics.

Why it matters

Two angles.

The inflation-transmission angle. Crude oil is the input to fuel costs, and fuel costs are a substantial component of household budgets. A $20 WTI move translates to roughly 0.3-0.5 percentage points on US headline CPI year-over-year, with a 1-2 month lag for transmission through gasoline prices. The Fed officially focuses on core inflation (which strips out food and energy), but the public and political pressure on the Fed comes from headline inflation — and the headline number is heavily oil-driven. Most of the 2022 inflation surge can be traced to the combination of WTI rising from ~$75 in early 2022 to $123 in March 2022, plus food inflation from the same Russia-Ukraine supply shock.

The US-producer-state-economy angle. Shale revolution turned the US into the world's largest crude oil producer (passing Saudi Arabia in 2018) and a net exporter (since 2020). When WTI is high, the Texas / Oklahoma / North Dakota economies boom — rig counts rise, capex increases, employment expands. When WTI falls, the opposite happens. The 2014-2016 oil crash (WTI fell from $107 to $26) wiped out tens of thousands of US shale-sector jobs and bankrupted dozens of mid-sized producers. The 2020 collapse repeated the pattern. The US economy is no longer a unitary oil consumer — it has a producer subset that's very sensitive to WTI in either direction.

What moves it, and what it moves

Moves WTI:

OPEC+ production decisions. When OPEC+ (OPEC plus Russia and other non-OPEC producers) cuts production, supply tightens and WTI rises; production increases do the reverse. Recent OPEC+ decisions have been driven by an increasingly explicit goal of defending a $70-80 WTI floor.
US shale production. The shale sector responds to WTI prices with a 6-9 month lag — high prices induce more drilling and higher production, which eventually puts downward pressure on WTI. Low prices induce shut-ins and reduced capex.
Geopolitical events. Middle East tensions, Iran sanctions enforcement, Russia-Ukraine dynamics, sanctions on Venezuelan crude — all routinely produce 5-15% intraday WTI moves.
Demand cycles. Recession fears reduce demand; strong global growth increases it. China's growth trajectory specifically — China is the world's largest oil importer — is a major macro input.
The US dollar. Inverse correlation (-0.4 to -0.5 over long windows). A strong dollar makes oil more expensive for non-dollar buyers, suppressing demand.

WTI moves:

US gasoline prices (with a 2-4 week lag).
Headline CPI inflation (gasoline plus heating oil are direct CPI components).
Airline ticket prices (oil is the largest single input cost for airlines).
Trucking rates and broader transportation inflation.
Texas / Oklahoma / North Dakota state-level employment, GDP, and tax revenues.
Producer state political dynamics (Texas state revenues are heavily oil-dependent).
Inflation expectations (5-year and 10-year breakevens are partly oil-driven).

A worked example: April 2020 negative prices

In early March 2020, WTI was trading around $45/barrel. The Saudi-Russia OPEC+ talks broke down on March 8; Saudi Arabia announced unilateral production increases. The same week, the WHO declared COVID-19 a pandemic. Global oil demand cratered as airlines grounded fleets and lockdowns reduced driving demand by 40%+ in major economies.

By March 20, 2020, WTI had fallen to $20/barrel. Through April, oil storage filled rapidly — Cushing's working storage was approaching capacity. Major oil tankers were anchored offshore being used as floating storage; rates for those tankers exploded.

On April 20, 2020, the front-month WTI futures contract for May delivery had its final hours of trading. Traders holding long positions couldn't find buyers willing to take physical delivery (no storage), and they couldn't roll forward (the June 2020 contract was trading at $20+, far above the front-month). They had to close at any price. The result: WTI for May 2020 delivery settled at -$37.63/barrel — the only time in modern history a major commodity has traded at meaningfully negative prices.

The episode was technical (a result of futures-contract physical-delivery mechanics, not "oil is worthless"). The June 2020 contract was still trading positively; by May, WTI was back above $20; by year-end, $48. But the negative print produced lasting changes: exchanges tightened margin requirements, storage operators raised fees, retail brokerages restricted certain commodity-futures access for retail traders, and the academic literature on futures-contract design got several new chapters.

The current cycle, and the open question

Where does WTI settle:

$60-70 base case. OPEC+ has demonstrated willingness to defend prices via production cuts; US shale break-even economics support production at this level; demand is steady. This is roughly the post-2022 mean.
$80-100 stress case. Geopolitical escalation (Iran sanctions enforcement, Middle East conflict escalation, Russia-related supply disruptions) can quickly push WTI to $90-100. The 2022 peak of $123 is the recent reference for what an acute supply shock can produce.
$40-50 demand shock. A meaningful recession, China demand collapse, or breakdown in OPEC+ discipline could push WTI to the $40s. US shale would shut in production at those levels; the political pressure on OPEC+ to resume cuts would intensify.

Watch points: OPEC+ meeting calendar and stated production policy; US weekly oil inventories (DOE/EIA publishes Wednesdays); US rig counts (Baker Hughes, Fridays); China oil-import volumes (monthly customs data); the WTI-Brent spread (when it widens beyond $5, signals US-specific oversupply); and the WTI forward-curve shape (steep contango signals oversupply; backwardation signals tight market).

FAQ

What's the difference between WTI and Brent?

WTI (West Texas Intermediate) is light, sweet crude produced primarily in the Permian Basin and other US shale plays, with its physical delivery point at Cushing, Oklahoma — a major oil-storage hub. Brent is a North Sea crude blend (Brent, Forties, Oseberg, Ekofisk, Troll) delivered offshore in the UK and used as the pricing benchmark for roughly two-thirds of internationally traded oil. The two crudes are similar in chemistry (both light, both sweet) but their pricing diverges based on transport costs, regional supply/demand, and US export dynamics. The WTI-Brent spread (Brent minus WTI) is itself watched as an indicator: a wide spread (Brent expensive relative to WTI) often reflects strong international demand or US production glut; a narrow spread reflects rough parity.

Why is the delivery point at Cushing, Oklahoma, important?

Cushing is the largest commercial oil-storage hub in North America — roughly 90 million barrels of working storage capacity, located at the convergence of major US oil pipelines. The WTI futures contract specifies physical delivery at Cushing for any contract held to expiration. This created an infamous moment in April 2020 when, in the depths of the COVID demand collapse, WTI for May 2020 delivery briefly traded at NEGATIVE prices (-$37.63/barrel on April 20). The reason: traders holding long futures couldn't find storage at Cushing to take physical delivery, so they were willing to pay buyers to take the contracts off their hands. Negative prices for any physical good are extremely rare; the episode reshaped how the industry thinks about storage capacity and futures-contract risk.

How does WTI affect US gasoline prices?

Roughly 60% of the cost of a gallon of US gasoline is the underlying crude oil price (the rest is refining margin, distribution, and taxes). A $10 move in WTI typically translates to a 25-cent move at the pump, with a 2-4 week lag (gasoline inventories absorb some of the change). The relationship is strong but not perfect: refinery utilization, RBOB (the gasoline-specific futures contract) seasonal dynamics, and regional bottlenecks can create gasoline-WTI spreads that diverge from history. Summer driving season typically widens the gas-WTI spread; winter narrows it.

How sensitive is the US economy to WTI moves?

The US is now a net oil exporter (since around 2020), thanks to shale production. So the *direct* economic impact of higher oil prices is mixed: it benefits US producer states (Texas, Oklahoma, North Dakota) and hurts US consumer-driven sectors (airlines, trucking, broad consumer spending). The aggregate effect on US GDP from a $10 sustained WTI move is small in either direction (~0.1% of GDP). But the inflation impact is meaningful: gasoline is a significant CPI component, and a $20 WTI move translates to roughly 0.3-0.5 percentage points on headline CPI YoY. The 2022 oil spike (WTI to $123) was a major contributor to the 9.1% headline CPI peak that year.

What was the April 2020 negative-price episode and why does it matter?

On April 20, 2020, WTI futures for May 2020 delivery settled at NEGATIVE $37.63/barrel — sellers were paying buyers to take the oil. The cause: COVID had collapsed oil demand globally; Cushing storage was nearly full; traders holding long May contracts couldn't take physical delivery (no storage available); they had to find any buyer willing to take the contracts before expiration. The episode reshaped industry thinking in several ways: futures-contract margins were tightened by exchanges, storage operators raised rates, and physical-delivery mechanics got more scrutiny. It also demonstrated that the spot price of a physical commodity can briefly behave in ways that violate basic economic intuition when the storage constraint binds.