CL stands for Light Sweet Crude Oil futures, or West Texas Intermediate (WTI) futures traded on the New York Mercantile Exchange (NYMEX). The CL (Crude Light) ticker symbol is named after the brand of crude that is its underlying asset: Light Sweet Crude Oil.
History
WTI Crude Oil Futures (CL) contracts were launched on the New York Stock Exchange in 1983. Over time, it gained popularity throughout the world, becoming the leader in terms of trade turnover among other energy contracts.
Light WTI crude oil with low density (827 kg/m3) and low sulfur content (0.4-0.5%) is perfect for conversion to gasoline and diesel fuel. WTI is produced and used in the Western Hemisphere (Texas). It is traditionally stored in oil storage tanks in Cushing, Oklahoma.
NYMEX WTI Light Sweet Crude Oil futures (CL) are the world’s most liquid and actively traded crude oil contracts. This is the most efficient way to trade in today’s global oil markets due to the following reasons:
- Contracts offer direct access to the oil market.
- They provide you with the opportunity to make a profit in a short period of time.
- Only margin is required for trading.
- The deep liquid market and intraday trading create favorable conditions for traders to choose the transaction time.
- Futures commissions must be paid after a position is closed.
Trading Cl futures means long-term trading which takes about six months. The duration of the contracts are determined by expiry dates. Cl futures are subject to monthly execution, indicated by a special letter code - Month Code: Cl.F (January), Cl.G (February), Cl.H (March), Cl.J (April), etc.
Futures with the nearest delivery and settlement dates usually have the greatest liquidity.
Value
Along with BK1 (Brent oil) and Dubai Crude, WTI crude oil futures (Cl) have gained a status of the world benchmark price thanks to the significant volume of trading. For more than 20 years, the value of Crude Light has been in the focus of market participants. Other crude oil grades are priced at a discount or a premium to the benchmarks.
WTI crude oil futures traded on NYMEX are physically settled. This means that a trader who has a short position on the futures contract must deliver crude oil, while the one who has the long position must accept the delivery. The contract size of 1 lot is 1,000 barrels of physically-deliverable crude oil. The CL price fluctuates in increments of $0.01 per barrel. Since traders from a wide range of countries participate in trading, oil transactions through the CME Globex electronic trading platform are carried out almost around the clock.
Various global and local factors affecting oil prices:
- US crude oil inventory levels, refinery operations, and refinery capacity;
- OPEC decisions, changes in export/import policy;
- consumer demand for gasoline, the state of the US economy, GDP, and others.;
- global events;
- weather phenomena, etc.
Thus, in mid-February 2021, US oil production plunged by more than 2 million barrels a day as cold weather in Texas brought havoc to key oil wells. As a result, oil prices surged. The price of WTI crude for March exceeded $60, hitting the highest level since January 2020.
In April 2020, WTI crude oil (Cl.K) turned negative for the first time in history. The price fell to minus $40 per barrel. However, there were no solid reasons for such a collapse in the physical market. Most likely, this was due to imperfect systems and algorithms operating in the financial market.
One thing is beyond dispute: crude oil is losing in value due to lower demand amid the coronavirus pandemic.
Today, WTI serves as a benchmark for global oil prices thanks to increased production in the United States, increased demand in Asia, as well as the lifting of the US crude oil export ban.
On NYMEX, nearly 1.2 million WTI contracts are traded a day, with more than 2 million positions opened.
