Argus launches US Gulf coast crude markers for Asia-Pacific markets

Producers, trading companies and refiners are increasingly adopting West Texas Intermediate (WTI) and other Argus benchmarks at the US Gulf coast to index growing shipments of North American crude moving to Asia-Pacific, the world’s leading oil import market. This raises the need to align price signals from different regions under a single timestamp.

Argus, the world’s largest independent price reporting agency, has launched outright prices for four key US Gulf coast crude streams with a 4:30pm Singapore timestamp — WTI Houston Asian timestamp, WTI Midland Asian timestamp, LLS (Light Louisiana Sweet) Asian timestamp and Mars Asian timestamp. These Asian markers will also be expressed as differentials to the Mideast Gulf’s Dubai benchmark.

The US Gulf coast market has become a key balancing point for crudes of different qualities. It is the world’s largest refining centre, and the supplier of the marginal barrel in the global crude market. Exports from the Gulf coast now regularly reach consumers in Latin America, Europe and Asia-Pacific.

“The highly liquid markets of the US Gulf coast and the wide diversity of participants have created conditions for a series of robust price indexes, which will now be extended to Asia-Pacific with the introduction of markers with a Singapore timestamp,” Argus Media chairman and chief executive Adrian Binks said. “Argus can help facilitate the Asia-Pacific region’s burgeoning imports from the US by publishing a value for those grades of crude oil at a time relevant to the local market.” 

US crude exports surged to nearly 925,000 b/d in the first four months of 2017, up by 78pc from 520,000 b/d last year, according to the US Census Bureau. About a third of total exports left for destinations in Asia-Pacific in January-April. China was the largest buyer, taking nearly 215,000 b/d of US crude. Unipec, the trading arm of state-owned Chinese refiner Sinopec and the world’s largest crude importer, is buying 3mn-4mn bl/month of US crude this year, accounting for about half of China’s total.

Argus calculates crude prices at the US Gulf coast using a volume-weighted average (VWA) of trades, the method for virtually all indexed spot and term transactions in North America. The VWA methodology allows for a more accurate representation of value because every barrel counts towards the price formation process, as opposed to market-on-close methodologies used in other markets.