<article><p><i>Argus</i> this week launched a new assessment for West Texas Intermediate (WTI) crude oil delivered to Houston.</p><p>The new price assessment will be set by a volume-weighted average of all trades done during the day at Magellan Midstream Partner's East Houston terminal. This mirrors the methodology used for other Gulf coast crude prices published by <i>Argus</i>.</p><p>"We have consulted widely and constructed the WTI Houston price in a way that reflects actual trade of a well-defined crude stream," said Euan Craik, Argus CEO Americas.</p><p>Ever since Shell reversed its Ho-Ho pipeline to run east from Texas to Louisiana in late 2013, market participants on the Texas coast have awaited the development of an active market for light sweet crude, one similar to the highly liquid Light Louisiana Sweet (LLS) benchmark in Louisiana. </p><p>Previously, a lack of takeaway capacity from the Permian basin production region constrained volumes below what an active market requires. That changed in December 2014 when the start of Plains' 250,000 b/d Sunrise pipeline enabled the delivery of greater volumes of WTI from the Permian to Houston. </p><p>Soon after, an active market sprang up at the Magellan East Houston terminal for volumes delivered via the Plains/Magellan 300,000 b/d BridgeTex line as well as Magellan's 275,000 b/d Longhorn pipeline.</p><p>Traders of the light sweet crude had been forced to value it with distant benchmarks, like Louisiana's LLS or Midland WTI, both also published by <i>Argus</i>. The new <i>Argus</i> WTI Houston assessment removes the basis risk inherent in using a more distant price benchmark. </p><p>Platts also launched an assessment of WTI at the Magellan terminal this week, which it refers to as WTI MEH.</p><p>Nearly 500,000 b/d of WTI from west Texas arrives at Magellan East Houston, where the terminal operator puts it into segregated tankage and makes spot trade possible within those tanks. Blended "domestic sweet" crude is not allowed into those tanks, so the trades there reflect a very specific quality of crude.</p><p>Magellan's East Houston terminal has 4.5mn bl of crude oil storage capacity and the company is considering adding up to 5mn bl of additional storage capacity.</p><p><i>Argus </i>WTI Houston will be published in the daily <i>Argus Americas Crude </i>and <i>Argus Crude</i> reports, and will be available through Argus Direct, the company's online platform. </p><p>tdf/dcb</p><p><br> Send comments to <a href="mailto:feedback@argusmedia.com" target="_parent"> feedback@argusmedia.com </a></p><p><u><a href="http://www.argusmedia.com/Info/General/News" target="_TOP"> Request more information </a></u> about Argus' energy and commodity news, data and analysis services. </p><p><i> Copyright © 2015 Argus Media Ltd - <a href="http://www.argusmedia.com/" target="_TOP"> www.argusmedia.com </a> - All rights reserved. </i></p></article>
