LNG

Intercontinental Exchange, the leading global provider of trading platforms for the whole energy complex from crude oil to LNG cargoes and European and Asian natural gas futures and options, has refined its contract for key US Gulf Coast oil futures.

Intercontinental Exchange Inc., the leading global provider of energy trading platforms for West Texas Intermediate (WTI) crude oil to European and Asian LNG and natural gas futures and options, has reported record activity in the ICE Midland WTI contract this month with participants using the contract to deliver physical Midland WTI barrels into Dated Brent and the rest of the Brent complex.

Intercontinental Exchange, a leading global provider of markets data and trading platforms for energy derivatives, said that in a move made along with Magellan Midstream Partners and Enterprise Products Partners a “no-charge” arrangement had been set up for the US Gulf Coast crude oil market amid a surge also in US natural gas derivatives volumes.

ICE said that the delivery process between the Magellan East Houston (MEH) and the Enterprise Crude Houston (ECHO) terminals to transfer crude oil through the Midland WTI AGC futures contract has been expanded to include deliveries conducted via ICE’s Exchange for Physical (EFP) and Alternative Delivery Procedure (ADP) mechanisms.

“If customers take an HOU futures position to delivery and they are not matched by the exchange at the buyer’s preferred terminal, the barrels are transferred between the MEH and ECHO terminals at no cost,” explained a statement from ICE, Magellan and Enterprise.

Magellan and Enterprise are expanding this arrangement to now include HOU futures customers who take delivery via ICE’s EFP or ADP mechanisms at one terminal and desire to transfer the barrels to the other terminal.

Free pump-over

“Expanding the free pump-over to include EFP and ADPs provides customers added flexibility to optimize their use of capital while still realizing the savings on the transfer costs they would otherwise incur,” said Jeff Barbuto, Global Head of Oil Markets at ICE.

The waived transfer costs apply to EFP and ADP deliveries in addition to all volume that goes to delivery through the HOU futures contract and is executed in accordance with ICE’s rules, and will remain in effect through March 31, 2023.

A 10-cent per barrel charge will continue to apply for all other general transfers meeting HOU quality specifications.

“The EFP mechanism allows participants to exchange HOU futures positions for the equivalent quantity of underlying physical Midland WTI barrels in the same delivery month,” they added.

Since the contract began trading earlier in 2022, approximately 67,800 HOU futures have traded, representing 67.8 million barrels, including a record volume day on March 10 of 3,065 contracts.

Open interest is at 2,647 contracts and goes out to January 2023.

ICE additionally reported that in May 2022 total average daily volume (ADV) up rose 6 percent year-on-year and total open interest was up 5 percent.

The leader was natural gas with ADV up 25 percent and open interest up 14 percent.

For North American natural gas ADV in May rose 37 percent and open interest 23 percent, including record futures open interest of 17.1 million lots on May 25, 2022.