Argus WTI Houston price assessment
The Argus WTI Houston crude price assessment represents Permian-quality WTI arriving by pipeline and traded at the Magellan East Houston (MEH) terminal for delivery at MEH in the prompt month. It is the most actively traded and transparent price assessment published by any pricing service for WTI at the US Gulf coast and is exceptionally liquid.
Typically, more than 300,000 b/d of prompt physical transactions for “Midland-quality WTI”, deliverable at the MEH terminal, are reported to Argus in each trade month. That equates to more than 150 trades each month. This compares with about 100 spot physical cargo trades per year for all the grades comprising the Dated Brent price basket (Brent, Forties, Oseberg, Ekofisk and Troll).
Argus WTI Houston reflects the volume-weighted average of all spot physical trades done for WTI at MEH in a given day. The price is expressed as a differential to the relevant Nymex light sweet crude futures settlement price as published in the Argus WTI Formula Basis price, and is found in each day’s Argus Americas Crude and Argus Crude reports.
How is the Argus WTI Houston price assessment used?
The Argus WTI Houston price assessment is used routinely as a pricing element in term physical contracts for WTI at Houston as well as for other light sweet crude grades at the Gulf coast, such as Bakken and Eagle Ford. The assessment also provides the settlement mechanism for financial contracts listed on the CME and ICE exchanges. These contracts are used widely by those wanting to participate in the financial trade of WTI or by those who want to hedge exposure to the physical WTI market at the Gulf coast. Open interest on the financial contracts settling against Argus WTI Houston exceeds 160,000 contracts, or 160mn bl of contracted volume.
Additionally, the Argus WTI Houston price assessment has become a regional benchmark, meaning that trades for other light sweet crude grades at the Gulf coast price at a differential to Argus WTI Houston. As the most transparent and robust indicator of the price of WTI at the Gulf coast, the Argus WTI Houston price is often used in the negotiation of crude export cargo prices, and it appears as a formal element of some international waterborne cargo contracts. Notable among the waterborne contracts using the Argus WTI Houston price are the contracts for delivery of Mexico’s Maya crude in the Americas.
Who should use the Argus WTI Houston price assessment?
Anyone with exposure to light sweet crude from the US Gulf coast will find the Argus WTI Houston price assessment beneficial. Traders, risk managers, planners, analysts, finance officers, senior executives, national, independent and international oil companies, regulators, exchanges and government officials use the Argus WTI Houston price assessment.