ICE launches tradable Permian Basin product

Monday, 07 March 2022
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Intercontinental Exchange (ICE) is pushing ahead with development of derivatives and products to allow the hedging of risk in the natural gas, LNG and oil complexes with the latest having become a “successful Permian Basin product launch.”

The company said that its ICE Midland WTI American Gulf Coast futures went to its first expiry on February 23, with 1,395 contracts going to expiry, equivalent to 1.4 million barrels, for delivery in March.

The initial success of ICE’s WTI American Gulf Coast oil product came after 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.

Since the Midland WTI contract began trading on January 24, over 12,000 ICE Midland WTI AGC futures have traded, equivalent to 12 million barrels of Permian Basin-originated WTI crude oil. Open interest is 3,576 contracts and goes out to January 2023.

Analysts note that contract is named after the Texas city of Midland which sits on the Permian Basin, a centre of oil drilling and future abundant supplies of associated natural gas for the expanding LNG sector on the Gulf Coast of Texas and Louisi-ana. However, the contract code itself carries the initials (HOU) of the other Texan energy city, Houston.

The contract is deliverable at both Magellan Midstream Partners’ Magellan East Houston (MEH) terminal and Enterprise Products Partners’ Enterprise Crude Houston (ECHO) terminal. 

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