U.S. crude oil prices: West Texas Intermediate 2012-2021

In 2020, the price of West Texas Intermediate (WTI) crude oil is expected to reach 30.1 U.S. dollars per barrel, a notable decrease from the year before. This came as a result of the decline in consumer demand following fears of a continued spread of the coronavirus pandemic and its impact on the economy, which in turn led to a disagreement between two of the largest oil producers, Russia and Saudi Arabia in early March.

What are benchmark crudes?

West Texas Intermediate is often used as a price reference point called a benchmark (or ”marker”) crude. This category includes Brent crude from the North Sea, Dubai Crude as well as blends in the OPEC Reference Basket. WTI, Brent, and the OPEC Basket have tended to trade closely, but since 2011, UK Brent has been selling at a higher spot price than WTI, largely due to increased oil production in the United States.

What causes price volatility?

In 2008, the average price of WTI peaked during the global financial crisis before dropping significantly in the next year. The prices of WTI followed a similar pattern when they surged in the years leading up to 2014, and then abruptly fell again. Between 2008 and 2014, the U.S. oil industry developed more economically viable methods to extract shale oil domestically, creating an oversupply known as the 2010s oil glut. Also known as Texas light sweet, WTI has both low density (“light”) and low sulfur content (“sweet), especially compared to other benchmark crude oils.