WTI Crude oil futures are the West Texas Intermediate, (WTI) or light sweet crude oil that is stored and distributed in Cushing, Oklahoma and has long been a benchmark for oil prices.
Energy futures markets allow traders to hedge the risk they may carry in their equity portfolio or jump to opportunities triggered by economic, political or weather events.
They offer instant exposure to the underlying commodity of your choice, whether it's crude oil, natural gas, gasoline or heating oil.
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Deep, liquid market that trades 920K contracts daily and has 2.17M in open interest, offering the depth to handle orders of any size.
Manage positions as global news and events that impact prices unfold.
Get certainty of blended 60% long term/40% short term capital gains treatment.
Control a larger notional value for a relatively small amount of money, enhancing your buying power.
Trading WTI Crude in the same marketplace as the rest of your NYMEX portfolio can reduce your overall margin requirements and help you save.
Safety & security of central clearing helps substantially mitigate your counterparty credit risk.
WTI Crude Oil is a physically delivered contract, which means that if a trader holds an open position through the last trading day for the contract month, they will be obligated to either make delivery (short positions) or take delivery (long positions) of 1,000 barrels of WTI Crude Oil per contract.
It is important to be aware of the dynamics involved in CL expirations. This includes being aware of the day the contract stops trading (as discussed above), the current supply/demand characteristics of the energy markets, and current storage capacity for crude oil ‒ among other factors.
A trader holding an open position in CL as last trading day approaches has three options. They can:
The delivery process in WTI Crude Oil does not begin until after the last trading day of the contract.
NYMEX Rulebook Chapter 200 describes the specific rules surrounding the delivery process for WTI Crude Oil. However, most individual traders will be prohibited from even entering into this process. Those holding positions in the nearest expiring month should be extremely cognizant of when the volume begins to move into the second month. Learn more.
In order to hold a futures positions, traders are required to post what we refer to as “margin” for each contract held. Unlike US equities, where trading “on margin” involves a loan from one’s broker (and associated interest payments), “margin" in futures is a performance bond or collateral held by the broker.
Currently, the margin requirement for one contract of CL is $4,750. If a trader holds one contract, they would be required to post that amount as collateral. If the position were to move against the trader, they would be required to post additional funds in order to maintain that amount. This is what is referred to as “mark to market”.
It is important to keep in mind that margin requirements can change as volatility in the market adjusts. CME Group will typically require higher margins as volatility increases. Additionally, brokerage firms may, at times, require higher margins than the Exchange.
The price of WTI Crude Oil can be impacted by many different factors, and it is the global benchmark for one of the world’s most important commodities.
One of the reasons that WTI Crude Oil is a popular product to trade is the many different elements that can contribute to the price of oil including supply/demand, storage, currency fluctuation, geopolitical disruptions (particularly in the oil-producing Middle East), natural disasters, and more.
Because of the numerous factors that can impact the price of WTI Crude Oil, we recommend traders familiarize themselves with CME Group’s Event Analyzer which lists the different economic events and number releases that can affect the price level. Learn more.
Dynamic circuit breakers (DCBs) are similar to traditional circuit breakers but move with the market throughout the day. Within a specific time interval, DCBs define an upper and lower limit of how far an instrument is allowed to move in a specific time interval, usually an hour.
Each product has its own assigned value used to calculate the circuit breaker level, typically a percentage of its previous settlement price. CL’s dynamic circuit breaker is 15% and you can find more information on our DCB methodology here and here. You can download our DCB per product here.
Velocity logic governs how far the price of a product can move within a very short period of time. Whereas price limits and DCBs look at price moves on a daily or hourly basis, velocity logic is a control designed to prevent market dislocation on a second by second, or even sub-second, time interval. Velocity logic events can cause a particular market to halt temporarily when a market reopens after a velocity logic event has been triggered, CME Group will restart the 60-minute window and calculate accordingly. Velocity logic uses a lookback window’s highest and lowest prices in the previous time interval. If CL’s lookback window consists of a high price = 42.17 and a low price = 42.13 and the velocity logic’s variance is 1.5, then the VL high bid = 43.67 and VL low bid = 40.63. You can learn more about velocity logic here.
Price banding evaluates incoming orders to ensure that a single order is not filled outside of an acceptable range from the last price, either on the upside or downside. It is symmetrically applied to both the upside (for bids) and downside (for offers) to determine the price band variation range (PBVR). With each price change, the PBVR is recalculated and the new range is applied. The CME Globex platform rejects all bids and offers outside the PBVR. CL’s price band is .5 (found in the GCC Product Reference Sheet). If CL is trading at $42.15, then the effective price bands are: bid = $42.65 and ask = $41.65.
All
5:00pm – 4:00pm (Sun–Fri) CT with a 60-minute break each day beginning at 4:00pm CT
WTI Crude Oil
1,000 barrels
CME offers electronic trading almost 24/6
$0.01 per barrel
CL
$10.00 U.S. Dollars
Deliverable
Quarterly, Monthly, Weekly
Trading terminates 3 business day prior to the 25th calendar day of the month prior to the contract month. If the 25th calendar day is not a business day
WTI Crude Oil
Monthly, Weekly
Monthly - LO
Weekly - LO1-LO5
Globex
5:00pm – 4:00pm (Sun–Fri) CT with a 60-minute break each day beginning at 4:00pm CT
American and European
$0.01 per barrel