Back in the late 1960s and early 70s, the United States was the largest producer of crude oil in the world—pumping nearly 10 million barrels a day. In the three or four decades that followed, production dropped by nearly half. During this time, Russia and Saudi Arabia became the largest producers.
However, after extensive advances in drilling technology, such as horizontal drilling and hydraulic fracturing (fracking), U.S. producers were able to extract vastly greater output from wells and shale rock formations. In light of this, the U.S. has seen a resurrection in the energy patch, with production nearing 11 million barrels per day (see chart below). In fact, the Energy Information Administration (EIA) recently estimated that the United States likely overtook both Russia and Saudi Arabia to again become the largest producer of crude oil. Much of that light sweet crude oil comes from the Permian basin in Texas (and New Mexico).
Moreover, this energy renaissance will have a major impact on CME Group’s West Texas Intermediate (WTI) Crude Oil contract. Already the premier global benchmark in energy, WTI Crude futures will play an even greater role in the energy landscape as a result of the U.S production resurgence. Producers, users and traders in WTI futures and options will have 11 million reasons a day to trade this key energy benchmark—which is among the most liquid futures contracts in the world, in terms of volume and open interest, and has excellent liquidity in non-U.S. time zones as well.
Source: EIA and CME Group Energy BLM
As the world's leading and most diverse derivatives marketplace, CME Group is where the world comes to manage risk. Comprised of four exchanges - CME, CBOT, NYMEX and COMEX - we offer the widest range of global benchmark products across all major asset classes, helping businesses everywhere mitigate the myriad of risks they face in today's uncertain global economy.
Follow us for global economic and financial news.