WTI Houston Crude Prices Gain Prominence as U.S. Oil Exports Jump

The benchmark crude prices at Houston have seen increased trading volumes as the rise in U.S. crude oil exports out of the Gulf Coast is making regional prices more important for physical and futures traders, analysts and industry officials have told Reuters.

Surging U.S. crude exports, particularly WTI Midland, have dominated global markets in recent months, with record export volumes and a significant portion being sent to Europe.

Before the U.S. allowed in 2015 crude oil exports to international markets other than Canada, soaring American production during the first shale revolution in the early 2010s was capping the price of WTI oil, which traded at a $15-$20 per barrel discount to Brent, the benchmark price of the oil pumped in the North Sea.

Significant midstream bottlenecks and the fact that U.S. crude was being exported only to Canada meant that Brent Crude commanded a wide premium over the price of American oil.

But after the U.S. allowed crude oil exports in 2015 and after midstream operators seized the opportunity to build pipelines in Texas and Louisiana leading to the U.S. Gulf Coast export terminals, American exports soared and made WTI a more influential benchmark in the oil markets.

So influential has the U.S. oil become that WTI Midland, produced in Texas, was included last year in the Dated Brent part of the Brent benchmark as one of several grades underpinning the contract.

Earlier this year, CME Group announced that trading in its U.S. Crude Grade futures, which are Argus-settled and trade as a differential to the global benchmark WTI Crude Oil futures, reached several records in April 2024.

So far in September, average daily volumes on the WTI Houston contract on CME more than doubled from September 2023, to a record high, CME representatives told Reuters.  

“The physical market for U.S. production has already moved to the U.S. Gulf Coast, and now the futures market is following suit,” Jeff Barbuto, global head of oil markets at the Intercontinental Exchange (ICE), told Reuters.

The growing importance of WTI Houston contracts has spared oil prices from spikes because crude stocks at the Cushing hub, the delivery and pricing point for the WTI crude futures on NYMEX, fell to the operational minimum earlier this month.