CME Group and Intercontinental Exchange are several weeks into the debuts of their basis-Houston West Texas Intermediate futures contracts, but the latter this week becomes the first to face the test of an expiry day and contract roll to a new front-month trading cycle. The December 2018 contract for ICE Permian WTI Futures expires Monday, and the front-month will become January on Tuesday, which is in line with the typical US Gulf Coast pipeline trading schedule. The contract itself launched October 22. CME launched November 5 its WTI Houston Crude Oil Futures contract, with January as the front-month. For now, there has been a disconnect between front-month CME WTI Houston (January) and front-month CME WTI Crude Oil Futures, which is WTI at Cushing, Oklahoma, (December); however, from Tuesday, both will be aligned. Both companies see an opportunity to capture a new Gulf Coast light crude benchmark amid the shifting landscape borne out of ever-increasing US crude production and exports. S&P Global Platts competes with both companies in providing pricing benchmarks to commodities markets. Comparatively, CME WTI Houston Crude Oil Futures had 563 average daily volume, and 108 lots of OI out to April 2019. Each lot represents 1,000 barrels. CME VS ICE, ENTERPRISE VS MAGELLANThe exchanges have sided with two major regional midstream outfits, each with its own strengths: ICE with Magellan and CME with Enterprise. The ICE contract reflects physical WTI deliveries at Magellan East Houston. CME reflects WTI into Enterprise terminals ECHO, Genoa Junction, and Houston Ship Channel. Magellan East Houston currently has 8.5 million barrels of crude capacity with a total of 9.2 million barrels expected before the end of 2019. By comparison, Enterprise HSC and ECHO have 34 million barrels of storage combined. Magellan representatives said in a Friday interview with Platts that MEH and nearby terminals’ storage capacity can be built out as liquidity increases in the ICE contract. While Enterprise may have the edge on storage tied to contracts, WTI MEH is far and away the most actively traded regional barrel so far. However, brokers and traders on occasion report bids, offers and trades for WTI at other Houston-area terminals. UNDERLYING PHYSICAL MARKET BUBBLES TO SURFACE WITH BUILD-OUTMore US crudes will be bound for export as Permian production of light, sweet crude increases. Export activity on the Gulf Coast is picking up and S&P Global Platts has received bids, offers and trade data linked to export activity at docks linked to both the CME and ICE contracts. A 600,000-barrel cargo of WTI crude for December loading in Seabrook, Texas, was heard offered late last week at the equivalent of a $7.05/b premium to cash WTI at Cushing, or about a 20-cents/b premium to WTI MEH at the time. Seabrook is home to Seabrook Logistics, a crude oil and condensate storage facility linked by a 24-inch pipeline to the Magellan East Houston terminal. The facility is a 50/50 joint venture between Magellan Midstream and LBC Tank Terminals. Seabrook currently has one dock with a 45-foot draft and the ability to load up to 700,000 barrels onto Aframax-sized vessels. A second dock, which will have the ability to fill partially loaded Suezmax vessels is under construction and is expected to be operational by late 2019, Magellan said. The post In the LOOP: ICE, CME basis-Houston WTI contracts see steady trading in opening weeks appeared first on The Barrel Blog. from https://blogs.platts.com/2018/11/20/loop-ice-cme-basis-houston-wti-contracts-see-steady-trading-opening-weeks/
0 Comments
Leave a Reply. |
About MeHi I am Robert Keasler 35 years old, I am mine Engineer currently attached with local petroleum exploration company. In free time mostly search for some better opportunity online. ArchivesNo Archives Categories |