ICE to launch Houston futures contract

Intercontinental Exchange (ICE) will launch a physically delivered Permian West Texas Intermediate (WTI) oil futures contract, deliverable in Houston, Texas, this quarter.

The ICE Permian WTI futures contract will provide price discovery, settlement and delivery at Magellan Midstream Partners' terminal in East Houston. Argus in February 2015 launched a new assessment for WTI delivered to Houston, set by a volume-weighted average of all trades done during the day at Magellan's East Houston terminal.

The Houston delivery point has become the pricing center for US crude production and exports, particularly since the lifting of a ban on US oil exports in December 2015. The new flat price futures contract is designed to serve hedging and trading opportunities in the growing market, ICE said.

The contract is also prompted by the growth in shale oil production in the Permian basin which is estimated at 2.8mn b/d and increased US exports amid growing Asian demand for light sweet crude oil, the exchange said. US crude exports hit a record monthly high in May of 2mn b/d with China as the top destination, according to the latest Census Bureau trade data.

Magellan said today the ability to trade storage futures contracts at its East Houston terminal will also become available through ICE this year, replacing an existing bi-lateral auction program.