Intercontinental Exchange, the leading global provider of trading platforms and clearing, and US pricing agency Platts have launched simultaneous consultations with the market on the evolution of the Brent complex, which includes Dated Brent, Cash Brent and ICE Brent Crude Oil futures.
ICE, which also operates other exchanges, including the New York Stock Exchange, also offers its platforms to allow traders to manage risk across multiple asset classes, including LNG.
In the ICE overall energy complex, it has posted record activity during 2021 in two key LNG trading derivatives, the European benchmark Dutch Title Transfer Facility (TTF) and the Japan-Korea Marker for North Asian spot cargoes.
The paper on the Brent market, co-authored by Platts and ICE which oversee, respectively, the Dated Brent physical benchmark price assessment and the ICE Brent Crude Oil futures contract, provides an overview of options for adding additional deliverable crude oil to the Brent complex and outlines a number of key issues and questions as it seeks market feedback.
Ongoing discussions conducted separately by ICE and Platts have demonstrated that industry opinion has focused specifically on two possible streams of crude to become part of Dated Brent.
The first is Johan Sverdrup as a deliverable option under the Forward Brent contract, which would remain on a Free on Board (FOB) basis.
The second is West Texas Intermediate (WTI) Midland oil, which would be a deliverable grade on a FOB US Gulf Coast basis.
All interested parties are encouraged to provide feedback and to put forward any further relevant items through the respective consultation channels.
The deadline for comments is September 30, 2021.
“Key to Brent’s multi-decade success as the global crude oil benchmark, has been its ability to evolve, and we look forward to ongoing discussions with customers as we navigate this next phase of its evolution with Platts,” said Jeff Barbuto, Global Head of Oil Markets at ICE.
“Our goal for this consultation is to facilitate a discussion with market participants covering all of the key issues which need to be addressed so that we can strengthen the Brent complex for decades to come,” added Barbuto.
In addition to Brent, natural gas has become a global market and the record levels of open interest and strong trading activity in TTF and JKM LNG futures reflect how these contracts have been developed by ICE and are at the forefront of global natural gas price formation.
Some long-term LNG supply contracts for nations like Japan are also linked to the oil price.
TTF and JKM futures and options form part of ICE’s global natural gas complex alongside the UK National Balancing Point, Henry Hub, the West India Marker (WIM) LNG (Platts) and the Spark LNG Freight Futures contracts.