New 10-day “decade” assessments for waterborne WTI at the US Gulf coast will enhance front-month price discovery
Houston, 29 November 2022
Global commodity price reporting agency Argus today launched new prices for WTI light sweet crude oil cargoes loading for export at the US Gulf coast. The additional assessments divide the front month into three “decades”, so that companies can trade in discrete strips, in step with the growing sophistication and liquidity of the US crude export market.
Rising production, higher exports and greater liquidity mean the US is rapidly becoming the world’s primary source of price discovery for internationally traded light sweet crude. US exports of WTI reached a record high of 3.1mn b/d in October, compared with an average of 2.5mn b/d this year.
A dramatic increase in global demand for WTI has been accompanied by steadily rising liquidity and growing sophistication of trading and risk management strategies. Open interest on futures contracts for WTI Houston and WTI Midland settling against Argus assessments has risen to nearly 500,000 contracts, making them among the world’s largest oil derivatives markets.
The new Argus Gulf Coast WTI decade assessments will be priced as differentials to Argus WTI Houston as well as Ice Brent for cargoes loading 1st -10th, 11th-20th and 21st until the end of the named loading month. The new assessments help market participants improve risk management and provide greater optionality, precision and flexibility in physical spot and term contracts, as well as derivatives markets.
“Permian-origin WTI has ascended to base-load status for refiners around the world. Increasing flows to the large demand centres of Asia and Europe mean it is poised to play a critical role in price formation of the Dated Brent complex, each day,” said Argus Media chairman and chief executive Adrian Binks. “The new price granularity we are able to offer the market with our launch of WTI decades at the US Gulf coast is an important development and builds on our benchmark status for domestic and international trade in US crude. We were pleased to respond to requests from market participants to develop these new prices, which will facilitate greater precision in pricing both physical and derivatives contracts and help this increasingly important market evolve.”