Intercontinental Exchange (ICE -0.1%) announces plans to establish a new crude oil futures contract with physical delivery in Houston, a sign of the city’s growing importance as the U.S. sends more crude abroad.
ICE expects to launch the contract on ICE Futures U.S. in Q3, subject to regulatory review.
The benchmark for U.S. oil prices has resided for decades in Cushing, Okla., because of its accessibility through major pipelines and extensive storage space, but with the U.S. on track to become a major energy exporter, “Houston has become the main trading hub," says Jeff Barbuto, VP of oil markets at ICE. “It’s a better representation of the economics of where U.S. crude production meets the water to be exported.”
U.S. crude oil exports have surged since a ban was lifted in 2015, reaching a record high of 3M bbl/day in June with much of it being piped to Houston and Corpus Christi hubs for refining and export.
Magellan Midstream Partners' (MMP -0.9%) East Houston terminal will act as the settlement and delivery point for the new contract.
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