CME Group to Launch West Texas Intermediate Futures Contract

By Alistair MacDonald

CME Group said Monday that it is launching a West Texas Intermediate futures contract with physical delivery to Houston, underscoring the rising importance of the city to energy markets.

The global exchanges group said it will offer a new WTI Houston Crude Oil futures contract with three physical delivery locations on the U.S. Gulf coast, pending regulatory review.

Intercontinental Exchange Inc. said in July that it is planning a new crude futures contract with physical delivery in Houston. The exchange is aiming to launch this quarter, subject to regulatory review.

Such contracts will provide traders with direct access to Houston prices.

For decades, the benchmark for U.S. oil prices has been in Cushing, Oklahoma, because of its accessibility through major pipelines and extensive storage space. However, with the U.S. on track to become a major energy exporter, some analysts say that pricing power is shifting to the Gulf Coast, where oil gets loaded onto tankers and shipped overseas.

Producers are already starting to look at the price of West Texas Intermediate crude in Houston when they plan their budgets.

"Houston's importance as a trading and export hub for physical crude oil from Cushing and the Permian Basin continues to evolve due to the shale oil revolution and repeal of the crude oil export ban," said Peter Keavey, CME Group Global Head of Energy, in a press release.

Write to Alistair MacDonald at [e-mail]

(END) Dow Jones Newswires

September 24, 2018 09:12 ET (13:12 GMT)

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