CME launches new Houston-based WTI futures contract

By Luke Geiver | September 24, 2018

CME Group and Enterprise Product Partners LP are bringing greater transparency to the pricing and risk associated with West Texas Intermediate crude. Through a newly announced collaboration, CME and EPP are connecting domestic users and exporters with a future contract designed to “reflect improved price discovery, liquidity and risk transfer,” in the Houston region.

“Houston’s importance as a trading and export hub for physical crude oil from Cushing and the Permian Basin continues to evolve due to the shale oil revolution and repeal of the crude oil export ban,” said Peter Keavey, CME Group Global head of energy.

According to Keavey, the new WTI futures contract linked to the Houston infrastructure for storing or delivering crude to export terminals and ships offers commercial customers and physical traders a way to hedge their physical price risk to WTI.

Along the Gulf Coast, EPP has 19 ship docks that make delivering WTI ideal. “Through its network of pipelines, storage and marine terminals, the firm has the capability to handle the flow of more than four million barrels per day of crude oil,” CME said. “Participants will also benefit from access to a diverse group of refiners, storage facilities and export facilities through the Enterprise network.”

The futures contract will give three locations for taking or delivering WTI: the Enterprise Crude Houston terminal, the Enterprise Houston Ship Channel, or the Genoa Junction.

Beginning in January 2019, the futures contract will be listed and subject to the rules of NYMEX.