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- Midland WTI will be Underpinned by Magellan and Enterprise’s Combined Pipeline, Storage and Marine Export Facilities in the Houston Area
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced the changes which ICE plans to implement to the ICE Permian West Texas Intermediate (WTI) Crude Oil futures contract (ICE: HOU) as it is restructured to become the ICE Midland WTI American Gulf Coast (Midland WTI AGC) futures contract.
Currently, the ICE Permian WTI futures contract is based on Magellan Midstream Partners, L.P. (NYSE: MMP) supply capacity and is deliverable at Magellan’s East Houston (MEH) terminal. Following the announcement by ICE, Magellan and Enterprise Products Partners L.P. (NYSE: EPD) in June 2021 and the subsequent completion of a market consultation, ICE is now working to add the Enterprise Crude Houston (ECHO) terminal as a delivery point, increasing the inbound supply capacity which underpins the contract to over four million barrels per day of Midland-quality WTI crude.
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 systems offer 60 million barrels of combined crude storage capacity. These distribution systems connect to a further 90 million barrels of storage capacity, bringing the total to around 150 million barrels of total crude storage capacity in the Houston area, as well as offering additional direct access to water for exports and floating storage.
“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.”
Following close engagement with the market, ICE has amended the crude oil quality specification of the futures contract to align more precisely with the current quality of WTI crude oil originating from the Permian Basin. This is published here along with the Contract Rules and Procedures.
Subject to the completion of regulatory processes, ICE will announce in due course when in early 2022 these changes will become effective and the ICE Permian WTI Crude Oil futures contract will be renamed as Midland WTI American Gulf Coast futures, retaining the contract code ICE:HOU.
