WTI Oil: Price, Charts, Overview and How to Invest
WTI Oil is the most popular instrument for investors who wish to invest in the oil market. It is an investment suitable for both short-term traders and long-term investors. In this analysis, we will explain what WTI Oil is, analyze its historical evolution and its forecast. We will also provide you valuable tips to best trade this commodity, as well as a tutorial on how to invest in WTI Oil.
What is WTI Oil? Overview
WTI Oil, or West Texas Intermediate, is a type of American oil also known as Texas Light Sweet. As a benchmark in the oil market, WTI is used both in crude oil pricing and as a commodity on the New York Stock Exchange. It is often compared to Brent crude from the North Sea or the OPEC basket from the Middle East.
WTI is a crude oil, which is notably lighter than Brent. It is also quite sweet, with a sulfur content of 0.24%. It is therefore considered superior to Brent because it requires less refining to make it into gasoline. Extracted in North America, West Texas Intermediate has properties that make it an excellent quality oil. It is refined in the United States, primarily in the Midwest and Gulf Coast regions.
WTI Oil Price History and Price Today
Below, we will analyze the historical evolution of the WTI oil price by identifying the major dates in its history.
WTI Oil Price Historical
The WTI oil prices history goes back to the 19th century with the development of industrial exploitation and its applications, notably in the automobile. To a certain extent, the WTI oil historical has followed the curve of the number of cars in the world. In addition, the need for raw energy for aircraft and ships has increased steadily over the decades.
Until 1973, everything was going well for the barrel of crude oil: demand was constantly increasing, and supply was sufficiently adapted without building up too much stock. Then came the first oil shock following the attack by Egypt and Syria on Israel. OPEC manipulated the prices with an increase of 70% of the unit price. The price of crude oil was set at $11.65 (about $60 today)—the first oil crisis in history.
In 1979, a new conflict episode in the Middle East (Iran-Iraq war) caused a drastic drop in production with a free fall in demand and a price that soared to $40 (about $126 today). At the end of the 1980s (1986), the world experienced a period of economic recession. Oil suffered the consequences with a drop in consumption and a price war that brought the barrel to $8 (about $17 today). At the beginning of the 90s, just before the Gulf War (USA - Iraq), the price rose to $40 ($71 today).
Since then, numerous conflicts, embargoes and political battles have strongly influenced the price of oil:
- An error of evaluation on the part of OPEC which led to a drop in the price in 1997
- Incidents in the Middle East, Latin America and Africa between 2004 and 2007 accompanied by a crisis in oil production and a rise in price
- Strong variations between 2008 and 2009 following the fall in American stocks and the exponential growth of China
- The Libyan conflict caused a drop in production and a price surge in 2011 with a record high of $135
- Since then, prices have fluctuated less, except in 2020 with the COVID pandemic, which brought the world economy to a standstill, impacting the price per barrel.
What Influences the Price of WTI Oil?
Find out below what are the main factors that can influence the commodity's price.
- WTI crude oil price depends primarily on supply and demand. However, supply in the oil market behaves differently than in other markets. Indeed, most of the world's production depends on the OPEC countries, which set production quotas to limit supply and keep the price of oil high. As such, OPEC's discussions and decisions regarding these quotas are arguably the most critical factor for the WTI Oil prices.
- The oil demand is the consumption of hydrocarbons, primarily through the use of internal combustion vehicles but also through a host of other industrial uses. Therefore, the shift to electric cars, and more generally to clean energy, could reduce oil demand. However, on the other hand, oil is getting scarcer. As such, demand may fall less quickly than supply, which would have a bullish impact on the USOil price.
- Every week, one can find in the economic calendar various statistics related to the oil market, including the weekly WTI crude oil stock, a statistic that can have a direct influence on the WTI Oil price, especially if the figures deviate from economists' forecasts.
- With a significant proportion of the world's oil reserves located in geopolitically unstable areas, particularly the Middle East, many geopolitical factors can influence the WTI Oil prices, including local wars and terrorist attacks. Another example of a geopolitical factor that can directly influence WTI Oil is the U.S. sanctions on Iran, which deprive the market of the country's production.
WTI Oil Chart
In order to properly approach WTI Oil trading, it is essential to take a look at its long-term chart. Therefore, we will make some critical observations in this section based on the monthly WTI Oil price chart below.
This WTI Oil price chart shows that oil has been in a downtrend since its all-time high of $146 in July 2008, but it also shows that this long-term downtrend is no longer relevant, thanks to several major bullish technical signals:
- The break above the downtrend line visible since the 2008 high
- The break above the 50, 100, and 200 month moving averages
In summary, the very long-term WTI Oil price chart has just technically turned upwards, which suggests that now could be a great time to buy.
Why Invest in WTI Oil Today? Points to Consider
In this section, we will list several advantages and features of WTI Oil to make sure that it is the right trading instrument for you.
- Oil is known for its high daily volatility, which allows short-term traders to take advantage of opportunities at any given moment. However, this volatility will be a weakness for those who wish to invest in oil for the long term.
- As is the case with all commodities, brokers offer through CFDs the possibility to benefit from high leverage in WTItrading, as well as the option to bet on the decline of the commodity.
- Although CFDs, and especially those offered by ZFX, are the easiest and cheapest way to trade WTI Oil, it is also possible to invest in oil with WTI oil futures.
- Like the forex currency pairs, WTI Oil is quoted in real time 24 hours a day, 5 days a week. It is, therefore, possible to trade WTI Oil in the evening and at night for example.
- In terms of WTI Oil forecasts, there are several indications that the WTI crude oil price will evolve positively in the medium term.
Where Can I Trade WTI Oil?
Where one to buy WTI Oil. And the name that came up most often was the broker ZFX. This is a highly regulated broker, offering many advantages including competitive fees and the MT4 platform. It is worth noting that ZFX offers its clients to trade stocks, indices, forex and commodities.
How to trade the WTI Oil Easily?
Buying WTI Oil through the broker ZFX is very simple and fast. Indeed, the account opening is done entirely online, and takes only a few minutes. Let's go through each of these steps in detail.
1 - Register with ZFX
For this first step, you will need to go to the ZFX broker's website, and click on the "open an account" button. You will then have to fill in a registration form with several personal details, including your phone number, which will be verified by SMS.
After filling out the form, click on "Next" at the bottom of the page. Immediately after this step, ZFX will display your MT4 login and password, and invite you to download the platform.
2 - Make Your First Deposit
To do this, you will need to click on the "make a deposit" button on the screen displayed immediately after registration. You will then have to choose a payment method. Let's take Mastercard as an example:
On this screen you will need to indicate the deposit amount and then click on "Confirm Deposit". You will then be asked for your credit card information before the final validation of the payment.
3 - Account verification
Finally, it will also be necessary to proceed with the account verification by sending supporting documents.
As shown above, you will need to upload the documents directly to the ZFX website.
4 - Trade USOIL
Once your documents are validated, you will then be ready to buy WTI Oil. To proceed, download the MetaTrader 4 platform and use the logins provided earlier to access the platform. Then, select the WTI oil asset and invest as you wish.
Things to Know Before Trading USOil
Here are find several tips to help you start trading WTI Oil in the best possible conditions.
- Learn technical analysis: technical analysis is a valuable tool for predicting the price of WTI Oil, especially in the short term, and for knowing when to buy and sell. Therefore, we recommend that you learn the basics of chart analysis, possibly via an online course.
- Follow the geopolitical news and economic calendar: as we saw above, geopolitics and specific statistics can strongly influence the WTI Oil price. Traders who invest in this market should therefore follow this type of news very closely.
- Practice with a demo account: Brokers, including ZFX, allow you to test their platform for free with a demo account. That way, you can practice and develop a trading strategy before applying it with real money.
- Adopt risk management rules: to avoid excessive losses, it is essential to adopt strict risk management rules when trading WTI Oil. This includes taking positions of the right size in relation to your available capital. It also includes the systematic use of stops and limits.
- Choose a good broker: this is essential to succeed in WTI Oil trading. In particular, you should ensure that your broker offers an efficient and regulated platform, and that its fees are reasonable. ZFX checks all of these boxes and more.
WTI Oil Forecast, Future and Prediction
This section will look at forecasts for WTI Oil from several angles to see if there is a greater chance that oil will rise or fall in the medium term.
Analyst Forecasts for WTI Oil Price
Several organizations provide USOIL forecasts. Perhaps the most important is the EIA, the U.S. Energy Information Administration. According to the EIA, WTI crude oil price is expected to average $65.69 per barrel for 2021. It then forecasts a decline to an annual average of $62.37 in 2022.
However, these are average annual forecasts. In the short term, the volatility of oil could indeed take it much higher. This is what two prestigious banks are predicting:
- Goldman Sachs expects WTI Oil to rise to $90 by the end of 2021, citing a faster-than-expected recovery in demand following the covid-19 pandemic, as well as U.S. production reduced by a severe hurricane season. The bank then expects WTI crude oil prices to fall back to $80 a barrel by the end of 2022.
- Bank of America expects WTI Oil to reach $100 a barrel over the winter for the first time since 2014. Among other things, the bank cites high heating-related oil demand due to a cold winter and increased aviation-related demand.
Technical Analysis USOIL
As seen on WTI crude oil charts like the one below, oil has been in a very clear uptrend for over a year now, after its value was wiped out in the face of the covid-19 pandemic in March 2020.
A bullish trend line can indeed be spotted, which actually stopped the most recent correction in WTI Oil in August 2021. The commodity is now facing resistance around $75, which has been blocking its path since 2018. With the uptrend showing no signs of weakness, this resistance could finally be breached. This would be a powerful bullish signal potentially putting $100 in sight.
Bottom Line: Should I Invest in WTI Oil Now?
Although WTI Oil is traditionally a short-term trading instrument, due to its high volatility, we have also seen in this guide that its medium-term outlook is favorable from many angles, making it suitable for long-term portfolios. Indeed, demand should continue to grow for many years despite the inevitable shift to clean energy. And in the short term, the post-pandemic economic rebound could even push the barrel to $100, according to some reputable analysts.
Would you like to increase the performance of your portfolio with WTI Oil trading? If so, we recommend that you take a close look at the broker ZFX. Indeed, for several reasons mentioned in this guide, it's an ideal broker for USOIL trading.