New 10-day windows for waterborne WTI at the US Gulf coast will support second-month liquidity
HOUSTON, Jan. 26, 2024 /PRNewswire/ — Global energy and commodity price reporting agency Argus is today launching two new prices for WTI light sweet crude oil cargoes loading for export at the US Gulf coast, in step with the growing sophistication and liquidity of the US crude export market.
The new assessments are for WTI cargo prices trading in 10-day loading windows in the month following the prompt trade cycle, bringing increased transparency for market participants that wish to secure US Gulf coast crude supplies further in advance. The assessments will be published as differentials and as outright prices.
Cargo prices can vary significantly throughout the month, reflecting the structure of underlying financial contracts as well as when each cargo needs to arrive at its destination. During periods of deep backwardation, when prompt prices are higher than forward levels, cargoes loading in the first 10 days of the month have been priced as much as $1.80/bl higher than cargoes loading later in the same month. Argus has added intra-month granularity to create further transparency in price formation, while allowing market participants to better hedge against the appropriate forward period to which each stakeholder is exposed.
The new assessments help market participants improve their risk management strategies and provide greater optionality, precision and flexibility in physical spot and term contracts. The outright price attached to each cargo assessment will help companies that frequently buy WTI to simplify contract language, using one comprehensive price that includes logistical cost differences between Cushing, Houston and the free-on-board (fob) loading terminal.
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 roughly 4mn b/d in 2023, compared with around 3.6mn b/d in 2022.
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 well over 650,000 lots, making them among the world’s largest oil 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 plays a critical role in daily price formation of the Dated Brent benchmark,” Argus Media chairman and chief executive Adrian Binks said. “We are pleased to have responded to requests from market participants to expand our WTI decade assessments at the US Gulf coast, which will facilitate greater precision in pricing both physical and derivatives contracts and help this increasingly important market evolve.”
Argus launched WTI decade assessments covering the first three 10-day periods of the month in November 2022. The expansion to include additional 10-day loading windows in the month following the prompt trade cycle enhances Argus’ benchmark status for domestic and international trade in US crude.
Argus contact information
London: Seana Lanigan
+44 20 7780 4200
Email Seana
Houston: Matt Oatway
+1 713 968 0000
Email Matt
Singapore: Tomoko Hashimoto
+65 6496 9960
Email Tomoko
About Argus Media
Argus is the leading independent provider of market intelligence to the global energy and commodity markets. We offer essential price assessments, news, analytics, consulting services, data science tools and industry conferences to illuminate complex and opaque commodity markets.
Headquartered in London with over 1,300 staff, Argus is an independent media organisation with 29 offices in the world’s principal commodity trading hubs.
Companies, trading firms and governments in 160 countries around the world trust Argus data to make decisions, analyse situations, manage risk, facilitate trading and for long-term planning. Argus prices are used as trusted benchmarks around the world for pricing transportation, commodities and energy.
Founded in 1970, Argus remains a privately held UK-registered company owned by employee shareholders, global growth equity firm General Atlantic and Hg, the specialist software and technology services investor.
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