September 8, 2023 [businesswire] – Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology, and market infrastructure, today announced that Enterprise Products Partners L.P. (NYSE: EPD) and Magellan Midstream Partners, L.P. (NYSE: MMP) have extended their fee waiver arrangement between the Enterprise Crude Houston (“ECHO”) and Magellan East Houston (“MEH”) terminals to transfer crude oil delivered through ICE’s Midland WTI futures contract (ICE: HOU) until December 31, 2024.
The extension comes as HOU had another record trading month with a record 307,000 contracts traded during August, as well as reaching record average daily volume of 13,347 contracts. The contract reached a series of open interest records throughout August, which has continued into September with open interest at a record 81,000 contracts. Open interest in HOU now goes out to December 2025 as customers choose HOU to manage their Midland WTI exposure.
If customers take an HOU futures position to delivery and are not matched at the buyer’s preferred terminal, the buyer can transfer its barrels between the MEH and ECHO terminals at no cost. The waiver also applies to customers who take delivery of HOU via ICE’s Exchange for Physical (EFP) and Alternative Delivery Procedure (ADP) mechanisms at one terminal and desire to transfer the barrels to the other terminal. Currently, a 10-cent per barrel charge is applied for all other transfers of HOU-quality WTI between the ECHO and MEH terminals.
“The arrangement between the ECHO and MEH terminals creates one big, fungible pool of liquidity across the two terminals with 4 million barrels per day of Midland crude supply capacity underpinning HOU, while providing certainty to customers that they can deliver and receive barrels where they need without additional costs,” said Jeff Barbuto, Global Head of Oil Markets at ICE. “More companies are choosing to switch their existing hedges to HOU to realize the significant margin offsets and take advantage of the direct Midland hedge HOU provides them.”
Customers can benefit from margin offsets of over 90% when clearing HOU alongside their other oil positions cleared at ICE Clear Europe, with offsets across a range of 700 oil contracts, including ICE Brent, ICE Gasoil, ICE WTI, ICE Dubai (Platts), ICE Murban, as well as RBOB Gasoline.
Each month, the HOU futures contract delivers approximately 5 million barrels of Midland WTI quality crude. The HOU contract has delivered approximately 64 million barrels of Midland WTI quality crude since early 2022, with the Midland WTI crude deliverable into HOU also now deliverable into Dated Brent and the rest of the Brent complex.
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