The emergence of a global crude benchmark

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25 February 2019

The emergence of a global crude benchmark

Report summary

US crude exports are poised to continue a precipitous rise in coming years – and now have a financial futures contract to price against. With the CME group launching a Houston futures contract in late 2018, an emergence of a new global crude benchmark could be imminent. In this joint paper written with CME group we explore: • The mechanics of the contract – delivery and hedging economics • Logistical connections, forecast pipeline flows and liquidity in the Houston market • Outlook for US crude exports and pricing in the global market • Houston market hub vs. other major Texas coastal export hubs

Table of contents

  • US crude export dynamics: past and present
  • Opening of the flood gates
  • Infrastructure scramble
  • Coastal pricing emergence
  • Houston WTI pricing relative to other global benchmarks
  • CME Group’s NYMEX Houston delivery contract specifics
  • CME Auction Platform
  • Anatomy of the WTI Houston market
  • Hedging alternatives
  • Outlook for US crude exports
  • Future coastal crude infrastructure development and export hub competition

Tables and charts

This report includes 11 images and tables including:

  • Brent-WTI differential ($/bbl)
  • US crude exports by destination region (kb/d)
  • US light sweet crude exports by coastal hub (kb/d)
  • Texas coastal hub estimated export capacity (kb/d)
  • Houston light sweet crude liquidity by source (kb/d)
  • NYMEX WTI Houston Crude Oil Futures (Daily Volumes and Open Interest)
  • Houston Area crude logistics and CME Group delivery points
  • Table 1
  • Forecast of US crude export volumes by end region (kb/d)
  • Forecast of Enterprise Products Partners Houston area export terminal volumes
  • Forecast of Export hub volumes (kb/d)

What's included

This report contains:

  • Document

    The emergence of a global crude benchmark

    PDF 1.36 MB