CME, Enterprise to launch US crude cargo auction

CME Group is partnering with Enterprise Products Partners to launch an electronic auction for US crude export cargoes starting in March.

Companies will be able to anonymously bid for Houston-loading cargoes via a two-minute electronic auction, which will be extended by five-second increments if a fresh bid is placed within five seconds of the event's close.

The auctions winner will have the option to choose a specific quantity from within a defined range provided by the seller.

Bids placed in the auction will be benchmarked on the exchange's physically delivered Nymex WTI Houston futures contract under the commodity code HCL.

The futures contract, which launched on 5 November, is intended to reflect the value of West Texas Intermediate (WTI) crude delivered to the producer's Houston system including the Echo terminal, Genoa Junction and the Enterprise Hydrocarbon Terminal (EHT) on the Houston Ship Channel.

HCL does not offer delivery onto a vessel, so the new auction should help bridge the gap for financial traders between CME's futures contract and the price of fob WTI at the US Gulf coast.