Hi,

I am curious about the market makers in the CL market. How does the market maker determine at which prices to place their offers/bids? Do they use the spot oil market as a guide? If so where does the retail trader find spot prices for WTI crude?

Thanks,

Blackgrey45

I do not believe that CL has designated market makers like some products do in fact I doubt there are many, if any, players trying to make money by purely capturing the bid/ask spread. Saying that there are obviously a lot of High Frequency Traders in CL, all doing whatever it is they do, all trying to make their perspective edge's. I do not believe any of them are doing this based upon what they see in the physical market. The physical market doesn't move tick by tick like the futures markets do. There isn't that much activity. Physical deals tend to be bigger (100-500 lots) and are often spreads (WTI Houston vs WTI Cushing or WTI-WTS or WTI-LLS etc)

I do not know a way that a retail trader can get spot crude prices for free, or even cheaply. The industry standard for physical crude oil prices is "Platt's Crude Oil Marketwire" but that is End of Daily Only, and costs thousands a month for a subscription.
https://www.spglobal.com/commodityinsights/en/products-services/oil/platts-crude-oil-marketwire