Photographer: Daniel Acker / Bloomberg
Photographer: Daniel Acker / Bloomberg
A new futures contract for raw corporate delivery in the Houston area may be just a few months away.
Enterprise Products Partners LP and Magellan Midstream Partners, the pipeline companies responsible for delivering two Houston active revenue contracts, said Thursday that they are coming together to create a broader benchmark. That could happen in a few months, said Bruce Heine, a Magellan spokesman.
Houston’s contracts reflect a shift in the focus of the oil industry from the storage hub in Cushing, Oklahoma, the delivery hub for New York’s trade futures, to the Gulf Coast. A global desire for U.S. skins led to the emergence of a new network of piping and termination equipment to connect the Permian Pool of West Texas and New Mexico to the world.
But liquidity remains thin for what it is instruments that started trading about two years ago.
“Two competing oil revenue contracts in a non-traditional region such as the Gulf Coast could cannibalize each other, effectively hurting both contracts,” said Vikas Dwivedi, pre- global energy innovation for Macquarie Group in Houston.
The delivery points are either Magellan’s East Houston destination or Enterprise’s ECHO site in Houston. Both facilities are already in use for Houston’s two oil futures contracts, Permian WTI at Intercontinental Exchange contract and WTI Houston crude CME Group futures.
It is unclear which exchange would host the new contract, or whether future contracts would be combined.
Campaign did not respond to an email seeking comment.