ICE Publishes Midland WTI AGC Contract Rules, Quality Spec
12/02 9:29 AM
ICE Publishes Midland WTI AGC Contract Rules, Quality Specs OAKHURST, N.J. (DTN) --- Intercontinental Exchange today announced changes it plans to implement to the ICE Permian West Texas Intermediate Crude Oil futures contract as it is structured to become the ICE Midland WTI American Gulf Coast futures contract. Currently, the ICE Permian WTI futures contract is based on Magellan Midstream Partners, L.P. supply capacity and is deliverable at Magellan's East Houston terminal. Following the announcement by ICE, Magellan and Enterprise Products Partners L.P. in June and the subsequent completion of a market consultation, ICE is now working to add the Enterprise Crude Houston terminal as a delivery point, increasing the inbound supply capacity which underpins the contract to over 4 million bpd of Midland-quality WTI. With both MEH and ECHO as delivery points, the futures contract will have export access to over 14 ship docks in the Houston area. Together Magellan and Enterprise's Houston distribution system offer 60 million bbl of combined crude storage capacity. These distribution systems connect to a further 90 million bbl of storage capacity, bringing the total to around 150 million bbl of total crude storage capacity in the Houston area, as well as offering additional direct access to water for exports and floating storage. Following close engagement with the market, ICE said it amended the crude quality specification of the futures contract to align more precisely with the current quality of WTI crude oil originating from the Permian Basin. Subject to the completion of regulatory processes, ICE will announce, in due course, when in early 2022 these changes will become effective. The ICE Permian WTI Crude Oil futures contract will be renamed as Midland WTI American Gulf Coast futures, retaining the contract code ICE:HOU. "U.S. crude fundamentals have been turned upside down over the last decade and we believe that WTI in Houston has become the most representative price for U.S. domestic crude oil," said Jeff Barbuto, global head of Oil Markets at ICE. "Transparent pricing, deep underlying physical liquidity, expansive storage, and connectivity to local and global demand, mean Midland WTI AGC will offer the market a strong alternative for pricing and managing U.S. crude price risk." (c) Copyright 2021 DTN, LLC. All rights reserved.
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