In Texas, affiliates of Magellan Midstream Partners and Enterprise Products Partners have jointly agreed to develop a crude oil futures contract.
Magellan CEO Michael Mears said: “The industry-recognised quality and consistency of Midland WTI crude oil at Magellan’s East Houston terminal, combined with flexible and reliable market access offered by both Magellan and Enterprise, make this joint effort a logical advancement for crude oil futures to provide added value for our customers, both domestically and globally.”
The contract in question will be developed for the physical delivery of crude oil in the Houston area, “in response to market interest for a Houston-based index with greater scale, flow assurance and price transparency”.
Magellan and Enterprise said they have set quality specifications consistent with West Texas Intermediate (WTI) from the Permian Basin and will offer delivery capabilities at Magellan’s East Houston terminal or Enterprise’s ECHO terminal in Houston.
AJ ‘Jim’ Teague, co-chief executive officer of Enterprise’s general partner, added: “This project will leverage the strengths of two major midstream infrastructure systems, featuring five pipelines serving the Permian Basin capable of delivering 2 million bpd of crude oil into the Houston market (with the potential for third-party pipelines to double the capacity of Permian Basin crude oil into the market), a robust Gulf Coast storage position, redundant connectivity to every refinery in the Houston area, and access to the largest network of crude oil export terminals located along the Houston Ship Channel.”
For more information visit www.magellanlp.com