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."
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