WTI Future Contract Specs: What You Need to Know
If you are involved in the oil industry or are simply looking to invest in energy futures, it is important to understand the specifications for West Texas Intermediate (WTI) future contracts. WTI is a benchmark for crude oil prices in the United States and around the world. Here are some key points to keep in mind when considering WTI futures.
Contract Size
WTI futures contracts are priced at $1 per barrel and are traded in units of 1,000 barrels. This means that each contract represents 1,000 barrels of oil. For example, if the current WTI price is $50 per barrel, a single futures contract would be worth $50,000.
Trading Hours
WTI futures are traded on the New York Mercantile Exchange (NYMEX) during regular trading hours. The NYMEX trading day begins at 6:00 PM Eastern Time (ET) on Sunday and ends at 5:15 PM ET on Friday. There is a daily trading halt from 5:15 PM ET to 6:00 PM ET.
Contract Months
WTI futures contracts are available for trading for the current month and the next 11 months. For example, if today is August 1st, you could trade a WTI futures contract for August 2021, September 2021, October 2021, and so on, up to and including June 2022.
Settlement
WTI futures contracts are settled physically. This means that when a futures contract expires, the buyer takes delivery of the underlying commodity (crude oil) and the seller delivers it. However, most futures contracts are settled via cash, with the difference between the futures price and the spot price of WTI at the time of expiration being paid to the holder of the contract.
Margin Requirements
To trade WTI futures, you need to have a margin account with your futures broker. The initial margin requirement for WTI futures is currently $4,860 per contract. However, this amount may vary depending on market conditions and the policies of your brokerage firm.
Conclusion
If you are interested in trading WTI futures, it is important to understand the contract specifications and the risks involved. As with any investment, it is essential to conduct thorough research and analysis before making any trades. With the right knowledge and a solid trading strategy, WTI futures can offer opportunities for profit and risk management in the volatile energy markets.