ICE Plans Permian Crude Futures Contract

The Intercontinental Exchange Inc., or ICE, an operator of global exchanges and clearing houses for U.S. financial and commodity markets, said it plans to launch a Permian West Texas Intermediate (WTI) crude oil futures contract with physical delivery in Houston.

The exchange, which is expected to start in the third quarter of 2018, subject to regulatory review, will provide traders with direct access to Houston prices.

As tight-oil production expands, the U.S. is fast becoming a major player in the global crude market. Wood Mackenzie estimates onshore continental U.S. production to exceed 11 million barrels per day by 2023, positioning the U.S. to become the world’s largest oil producer. Over the next decade, the Permian basin will constitute the largest percentage of U.S. crude exports, at more than 60 percent of total volumes, or 1.5 million barrels per day by 2025.

With the growth and increased exports, as well as Asian demand for light sweet crude oil, Houston has become the central delivery point for U.S. crude. The contract will allow producers to hedge production relative to coastal prices, North America crude oil analyst said.