PRESENTATION
ICE Midland WTI American Gulf Coast (HOU) Futures
ICE’s Global Head of Oil Market Research presented at Crude Oil Quality Association (COQA), New Orleans on 2 Mar. 2023.
The market needs a transparent, liquid, physically deliverable futures contract for Midland-origin/Midland-quality crude priced in Houston - Mike Wittner highlights why Midland WTI (HOU) is an efficient tool to manage risk.
Highlights
- Why Midland WTI - the U.S. domestic price has transitioned to Midland WTI on the U.S. Gulf Coast
- Partnering with Magellan and Enterprise systems provides critical mass in terms of:
- Supply of Midland-origin / Midland quality WTI crude
- Crude storage capacity
- Connectivity / access to domestic and export refining demand
- How the ICE Midland WTI AGC (HOU) futures contract enables participants to directly price and hedge the marginal domestic barrel (Midland WTI quality crude) in a efficient and cost-effective manner
- ICE Midland WTI AGC (HOU) will work well as part of the revised Brent complex, due to quality and deliverability
WTI Crude Quality Readings
Purchase
A benchmark for pricing U.S. crude production and exports, with a delivery point in Houston, the most active crude trading hub on the U.S. Gulf Coast. Deliverable into the MEH and ECHO terminals, barrels from the Permian basin are recognized for their consistent high quality.
Store
Short-term storage of Permian WTI barrels is available at Magellan’s East Houston Terminal upon taking delivery of the high quality crude. The ability to bid in an auction for the storage space complements the contract, providing transparent pricing and the ability to plan crude movements.
Export
Enhance export capabilities by acquiring the right to move Permian WTI and WTL barrels directly onto the water through the dock capacity auction. The auction prices include all associated costs to move a vessel’s worth of Permian WTI at Seabrook and WTL at Galena Park for loading crude to the water.
ICE Midland WTI American Gulf Coast Futures (HOU)
Additional Inter-commodity spreads will be offered to help customers mitigate price risk between various locations and grades:
- Midland WTI HOU vs ICE WTI Futures (Cushing) - price and quality differential between Mid-continent WTI vs Houston WTI
- Midland WTI HOU vs ICE Brent Futures - U.S. crude where it meets the water vs the global crude oil benchmark
Each contract represents 1,000 barrels and the price increment is $0.01 per barrel.
A predictable quality specification that reflects WTI crude delivered directly from the Permian Basin. Deliverable into MEH and ECHO establishing consistent quality and price transparency in the Houston market.
Parameter | Units | Min | Max | Required Test Method |
| API Gravity | °API, 60°F | 40.0 | 44.0 | ASTM D1298 or D5002 |
| Sulfur Content | % (m/m) | 0.20 | ASTM D4294 | |
| Mercaptan Sulfur | ppm Wt | 75 | UOP 163 | |
| RVP | PSI | 9.0 | ASTM D6377 | |
| BS&W | % (v/v) | 1.0 | ASTM D4007 per API MPMS 10.4 | |
| Nickel & Vanadium (Combined) | mg/kg | 3.0 | ASTM D8252 or D5708 Procedure B |