AGS liquidity, price rise in December trade

Spot liquidity for standard Midland-quality WTI at the US Gulf coast climbed by 19pc in the December trade month from November trade as prices rose.

Trade month volumes reported for inclusion in the Argus AGS Marker and AGS index totaled 406,624 b/d during the December trade month, which closed at the end of last week. Roughly 91pc of that volume sold at the Magellan East Houston (MEH) terminal at 371,854 b/d, up by 14.9pc from the 323,667 b/d during the November trade month.

WTI volumes at MEH set the Argus WTI Houston benchmark and are also adjusted 7¢/bl lower for inclusion in AGS to reflect value at Enterprise Products' nearby Echo terminal.

The remaining 9pc of AGS trade month volume in December was comprised by WTI deals trading at the Echo terminal. WTI at Echo volumes more than quadrupled to 34,760 b/d during December trade, reflecting the location's largest reported trade-month volume since AGS and the AGS Marker were launched on 26 June.

Prices inched upward over the trade month as WTI demand increased at the US Gulf coast. The AGS Marker rose by 98ٙ¢/bl on the final day of the trade month to a record $46.52/bl on 25 November.

The AGS Marker averaged $40.86/bl during December trade, up by 27¢/bl compared to the new benchmark's average of $40.59/bl in the November trade month, as sell-side economics to export US crude added support to the Permian crude benchmark at the coast.

WTI fob Houston also trended higher relative to the pipeline benchmark, averaging a 9¢/bl premium to WTI at MEH compared to an average 15¢/bl discount the month prior.

The waterborne crude maintained a discount to the pipeline index through the majority of the October and November trade months, indicating US sellers exporting crude would need to pay for loading costs to place cargoes in the international market.

Coastal premiums for WTI to the light sweet crude benchmark in Cushing, Oklahoma, also rose. The average AGS index differential to WTI gained 20¢/bl month-on-month to a 69¢/bl premium. The index closed 25 November at a $1/bl premium to Nymex, or its strongest since 13 July.

WTI at MEH averaged a 76¢/bl premium to the Cushing benchmark during the December trade month, up by 12¢/bl compared to November.

WTI fob Houston, which reflects the price of Aframax-sized cargoes loading at the Enterprise Hydrocarbon Terminal (EHT), Seabrook, Texas City and Freeport, also rose by 21¢/bl month-on-month against its primary benchmark Ice Brent as delivered prices in Europe rise.

Spot trade volume at the US Gulf coast is poised to continue rising should arbitrage economics improve from the Houston area, which would spark traders to purchase more volumes at MEH and nearby terminals, rather than in the Permian basin or Cushing.

January WTI Houston is already trading at a $1.10/bl premium to Nymex so far today, marking a roughly 10¢/bl increase compared to last week.

By Amanda Hilow