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Magellan, Enterprise Confirm Futures Contract

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Magellan Midstream Partners, Enterprise Products Partners, and Intercontinental Exchange have established a futures contract for the physical delivery of crude oil in the Houston area.

The Midland WTI American Gulf Coast contract is being launched in response to market interest for a Houston-based index with greater scale, flow assurance and price transparency.

It will utilize the capabilities and global reach of ICE’s industry-recognized trading platform and is due to be launched by ICE by early 2022, subject to regulatory approval.

The quality specifications of the new futures contract will be consistent with a West Texas Intermediate crude oil originating from the Permian Basin with common delivery options at either the Magellan East Houston terminal or the Enterprise Crude Houston terminal.

In support of this new futures contract, Magellan and Enterprise anticipate discontinuing their existing provisions for delivery services under current futures contracts deliverable at each terminal once the new contract is finalized.

Harold Hamm, chairman of the board of Continental Resources and founding member of the American Gulf Coast Select Best Practices Task Force Association said, “We think a futures contract in the most interconnected market center in the country, with a widely accepted quality spec, which settles with guaranteed delivery of crude oil is an important new alternative for the industry.

“The task force has worked tirelessly to create a marker with transparency and liquidity that is waterborne for this modern era,” he continued. “The Midland WTI American Gulf Coast futures contract established by the alliance between ICE, Magellan and Enterprise is a huge step forward for the industry and goes a long way to accomplishing the mission on which the task force has been working.”

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