Magellan, Enterprise Houston contract to launch 24 Jan

Magellan Midstream and Enterprise Products' joint futures contract for West Texas Intermediate (WTI) deliveries to Houston, Texas, will go live on the Intercontinental Exchange (Ice) on 24 January.

The contract, dubbed Midland WTI American Gulf Coast, will be listed under the commodity code HOU and offer the option to physically deliver Permian WTI to the Magellan East Houston (MEH) terminal and Enterprise's nearby Echo terminal.

The contract was originally announced in June as a replacement for Enterprise's HCL contract listed with rival exchange CME Group and the current HOU contract on Ice, which only includes MEH as a delivery point.

The first contract month available for trading and delivery to either terminal will be March 2022.

Buyers will have the ability to indicate their terminal of preference when taking deliveries.

In order to help facilitate trade liquidity between the two terminals, Magellan and Enterprise — historically known as competitors — have agreed to transfer Midland-quality WTI crude between the two locations at no charge for the first year the contract is live, an Ice representative told Argus.

There will be a 10¢/bl transfer fee for all other WTI shipments between terminals that meet the HOU quality specifications.

Ice amended the quality requirements for the contract in late 2021 to 40-44°API gravity and a sulfur content of less than 0.2pc, aligning the contract more closely with WTI qualities shipped to the US Gulf coast from the Permian basin.

Previously, the HOU contract mirrored quality specifications at MEH, which allowed a gravity range of 36-44°API and a sulfur content up to 0.45pc. The HCL contract accepted 40-44°API crude with a sulfur content up to 0.275pc.

By Amanda Hilow