Exclusive briefing on Midland WTI Crude Oil Futures (HOU)
In a recent webinar held by ICE, Mike Wittner, Global Head of Oil Market Research discussed
Price risk management
- HOU offers a more direct, more efficient (simpler) and more cost-effective way for producers, refiners and traders to hedge USGC exposure
- Minimize unnecessary exposure to Cushing logistics/storage constraints and related price volatility
- Once Midland WTI hits the water, it prices off Brent (to Europe) or Dubai (to Asia). HOU can be used to hedge export flows to both regions
Physical supply risk management
- U.S. physical market participants experience occasional problems with Midland crude supply (off-spec quality and non-ratable volumes)
- Going to expiry in the HOU contract results in guaranteed physical delivery of on-spec and ratably delivered Midland WTI crude that can be run in U.S. domestic refineries or exported to European and Asian refiners
- Volumes are received as planned: on-spec and at the agreed volumes and delivery timeframe
Speaker
- Mike Wittner, Global Head of Oil Market Research, ICE
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