Global energy and commodity price reporting agency Argus has launched a new light crude price assessment to reflect growing light oil production in the Permian basin of west Texas and New Mexico. The new West Texas Light (WTL) price, published daily in the Argus Crude report, is for Permian basin crude with a gravity of 44.1-49.9°API traded at terminals in Midland, Texas.
Midland is the chief gathering hub for Permian basin crude, the fastest growing source of oil in the world. An increasing share of Permian crude is lighter than 44°API, and midstream companies have created the WTL stream to separate lighter crude from the denser main Permian WTI grade, which is typically at 40-44°API.
Much WTL trade is taking place at differentials to Argus’ benchmark WTI Midland price, which is assessed at terminals in Midland, Texas. Argus will publish its new WTL price assessment as a differential to WTI Cushing as well as an outright number.
WTL has also begun to trade at Houston at a differential to the benchmark Argus WTI Houston price, which is widely used to price US exports. Argus WTI Houston, which is assessed at Magellan’s MEH terminal, is also the settlement price for derivatives contracts on the Ice and CME exchanges, where open interest currently stands at 200mn bl with daily trading volumes topping 10mn bl. Argus intends to publish a separate WTL Houston index as volumes grow.
“Argus welcomes the opportunity to provide greater transparency to the market for Permian crude as production continues to grow and as more of the output is lighter than traditional WTI,” Argus Media chairman and chief executive Adrian Binks said. “Argus WTI Houston and Argus WTI Midland are two of the most liquid and transparent physical spot crude price indexes in the world. We expect to see the liquidity of the WTL market at Midland and later at Houston grow rapidly as well.”
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