Info-Graphs

WTI Overtakes Brent In Liquidity

When the U.S. lifted the export ban of crude in 2015, it changed the rules of the oil. Specifically, the spread between WTI and Brent oil got smaller. Today, this still a $5 a barrel spread between the U.S. (WTI) and international contracts (Brent). WTI is traded through the Nymex (owned by the CME), and Brent is traded through ICE.

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

For the first time in since late 2014, open interest on WTI has overcome Brent via the Financial Times.

WTI Brent Liquidity

Open interest in West Texas Intermediate crude oil futures totals 2.4m contracts….

The number of short, or selling, positions in WTI among swap dealers has increased by 37 per cent to 450,000 contracts so far in 2017, according to Commodity Futures Trading Commission data released Friday.

Why now? Why WTI? Financial Times points to the rebound of shale.

The expanding size of New York’s WTI futures market comes after drillers returned to the US oil patch in response to falling costs and more stable prices near $50 a barrel. Shale producers tend to prefer contracts linked to WTI to hedge against another collapse in prices. This is because oil prices in the Permian and other shale regions track WTI more closely than Brent, which is pumped from the North Sea.

For a little more history on the competition between these two contracts see our article discussing when Brent took over WTI in open interest.

Article by RCM Alternatives