Intercontinental Exchange, Inc. (NYSE:ICE) announced today that the ICE Midland WTI futures contract is now further aligned with Midland WTI crude oil deliverable in Dated Brent and the rest of the Brent pool after ICE updated the crude quality specifications in the contract.
The underlying crude oil quality of HOU futures contracts is now fully aligned with the globally accepted quality standard for Midland WTI crude, after ICE added a maximum iron content of 10 milligrams per kilogram (mg/kg) and replaced the combined maximum nickel content and vanadium with an individual maximum content of 2.0 mg/kg each. In addition, the maximum Reid vapor pressure (RVP) was increased to 9.5 pounds per square inch (Psi).
“This provides the market with the only transparent source for guaranteed Midland grade WTI parts,” said Jeff Barbuto, Head of Global Oil Market at ICE. “We continue to see strong growth in volume and deliveries, and we see increasing activity from natural producers pricing barrels against the HOU futures price.”
HOU is priced and physically delivered at the Enterprise Crude Houston (ECHO) and ONEOK Magellan East Houston (MEH) terminals, which connect to Platts-approved water terminals for Midland WTI Brent delivery.
Benchmarking production and exports of Midland origin and quality crude, HOU futures hit record trading in the first quarter of 2024 with more than 837,600 contracts traded, up 200% year-on-year (YoY) with a record average daily volume of more than 16,200 contracts in March 2024. Midland WTI crude oil deliveries through the HOU contract average 4.4 million barrels each month.
HOU is part of ICE’s global oil portfolio covering over 800 futures and options contracts backed by Brent, which is used to price over three-quarters of the world’s international crude oil trade. Clients can benefit from margin hedges of up to 95% when clearing HOU along with other oil positions cleared on ICE, with hedges across all contracts such as ICE Brent, ICE Gasoil, ICE Dubai (Platts), ICE Murban, as well and RBOB Gasoline.
Brent futures and options open rose 12% year-on-year to 5.1 million contracts. Brent options, which represent the world’s main crude oil options market in terms of open rate and volume, hit a record open rate of 3.5 million contracts on April 24, 2024, up 51% year-on-year.