Affiliates of US-based Magellan Midstream Partners and Enterprise Production Partners have agreed to jointly develop a crude oil futures contract in Houston, Texas, US.
The partners have developed the futures contract, for the physical delivery of crude oil in the Houston area, in response to market interest for a Houston-based index with greater scale, flow assurance and price transparency. Magellan and Enterprise have set quality specifications consistent with West Texas Intermediate (WTI) from the Permian Basin and will offer delivery capabilities at Magellan’s East Houston terminal or Enterprise’s ECHO terminal in Houston.
‘The industry-recognised quality and consistency of Midland WTI crude oil at Magellan’s East Houston terminal, combined with flexible and reliable market access offered by both Magellan and Enterprise, make this joint effort a logical advancement for crude oil futures to provide added value for our customers, both domestically and globally,’ says Magellan CEO Michael Mears.
A.J. “Jim” Teague, co-chief executive officer of Enterprise’s general partner, adds: ‘This project will leverage the strengths of two major midstream infrastructure systems, featuring five pipelines serving the Permian Basin capable of delivering 2 million bpd of crude oil into the Houston market (with the potential for third-party pipelines to double the capacity of Permian Basin crude oil into the market), a robust Gulf Coast storage position, redundant connectivity to every refinery in the Houston area, and access to the largest network of crude oil export terminals located along the Houston Ship Channel.’
Source: Tank Storage Magazine