Energies Media
  • Magazine
    • Digital Magazine
    • Digital Magazine Archive
  • Features
  • Upstream
  • Midstream
  • Downstream
  • Renewable
    • Solar
    • Wind
    • Hydrogen
    • Nuclear
  • People
  • Events
  • Advertise
  • Contact
No Result
View All Result
Energies Media
No Result
View All Result

Houston Takes Center Stage As Major Crude Oil Trading Hub

by Ryan Dusek
October 19, 2018
in Oil and Gas News, News
Houston Takes Center Stage As Major Crude Oil Trading Hub

Texas Consultancy Develops AI to Address Project Challenges in the U.S. Energy Sector

A Critical Mineral at a Critical Moment: The Importance of Restoring Domestic Tungsten Production in the U.S.

Since the lifting of a decades-old ban on crude exports at the end of 2015, Houston has emerged as a major physical crude oil trading hub, overtaking the country’s primary crude benchmark (West Texas Intermediate, or “WTI”) pricing power long held in Cushing, Oklahoma due to access to major pipelines that run through it and ample storage space.

The surge in crude oil production can be tied to the shale boom, particularly in the Permian Basin in West Texas and New Mexico, where vast amounts of crude oil flow directly to the Gulf Coast – oftentimes bypassing Cushing altogether – to destinations such as Asia, Europe and Latin America. Traders and market observers say WTI crude at Houston is a preferred futures contract hub over WTI Cushing because it better reflects global market balance and offers a more liquid market for export customers.

Since the lifting of the crude oil export ban, U.S. crude exports have surged nearly 350%, from 490,000 barrels per day (bbl/d) in January 2016 to a record 2.2 MMbbl/d in June 2018, according to the U.S. Energy Information Administration (EIA). Rising oil production in the Permian Basin, which is estimated at around 3.5 MMbbl/d, along with increased U.S. light sweet crude exports to overseas customers, have prompted the launch of new physical futures contracts in Houston that are set to debut later this year.

InventU
InventU

In fact, the U.S. port district of Houston-Galveston earlier this year began exporting more crude oil than it imported for the first time on record, according to EIA statistics. In April 2018, crude oil exports from Houston-Galveston surpassed crude oil imports by 15,000 bbl/d. In May 2018, the difference between crude oil exports and imports increased substantially to 470,000 bbl/d.

WTI Permian Crude Oil Contracts Make Their Debut in Houston
Showtime: WTI Permian Crude Oil Contracts Make Their Debut in Houston

On July 17, 2018, the Intercontinental Exchange Inc. (“ICE”) announced plans to launch in the third quarter of this year a physically delivered Permian WTI crude oil futures contract, deliverable in Houston. According to ICE, the new futures contract “is designed to provide price discovery, settlement and delivery at Magellan Midstream Partners LP’s terminal in East Houston.”

The contract is expected to provide ample liquidity for traders and brokers seeking flexible hedging and trading opportunities for export shipments.

Meanwhile, CME Group on September 24, 2018, announced that it intends to offer a new WTI Houston crude oil futures contract with three physical delivery locations on the Enterprise Houston system, pending regulatory review. WTI Houston crude oil futures will be listed with and subject to the rules of NYMEX, beginning with the January 2019 contract month.

The new WTI Houston crude oil futures contract expands CME Group’s already robust suite of crude oil futures and options and will complement its global benchmark NYMEX WTI Light Sweet Crude Oil futures. Participants will have the flexibility to make or take delivery of U.S. light sweet crude oil at the Enterprise Crude Houston (“ECHO”) terminal, Enterprise Houston Ship Channel (“EHSC”) or Genoa Junction through the new contract.

Enterprise has a network of 19 ship docks along the U.S. Gulf Coast and is the largest exporter of crude oil in the U.S. and the ideal provider of delivery points for this physical WTI Houston futures contract, according to CME Group. Through its network of pipelines, storage and marine terminals, the firm has the capability to handle the flow of more than 4 MMbbl/d of crude oil. Participants will also benefit from access to a diverse group of refiners, storage facilities and export facilities through the Enterprise network.

What We’re Hearing

Opportune LLP has heard very little from existing clients about the new WTI Permian crude oil contracts delivered into Houston. That being said, we routinely see examples of management teams executing hedging mismatches. For instance, some companies have marketing agreements that sell WTI at Cushing and are erroneously hedged with Brent crude contracts. These pricing relationships tend to deteriorate over time and eventually result in both losses on production and the hedge itself. These costly mistakes can easily be avoided.

Author Profile
Ryan Dusek
Ryan Dusek
Director - Opportune LLP

Ryan is a Director at Opportune LLP. His industry experience includes commodity trading, risk management, supply chain optimization and derivative valuation. He is an expert in developing financial models to quantify complex/uncertain issues and deliver real-world solutions. He has extensive experience in the pricing, hedging and portfolio management of the retail natural gas markets. Ryan has led all aspects of commercial-deal structuring and pricing for wholesale natural gas trading and origination. He has over 15 years of experience in the energy industry. Ryan has an MBA from the University of Texas in San Antonio where he specialized in Finance.

Author Articles
  • Ryan Dusek
    https://energiesmedia.com/author/ryan-dusek/
    Hyperinflation: Crude Oil Prices To Infinity & Beyond
    September 29, 2021
    Hyperinflation: Crude Oil Prices To Infinity & Beyond
  • Ryan Dusek
    https://energiesmedia.com/author/ryan-dusek/
    $42/BBL Crude Oil Price In A Month? Here’s How It Could Happen
    May 7, 2020
    $42/BBL Crude Oil Price In A Month? Here’s How It Could Happen
  • Ryan Dusek
    https://energiesmedia.com/author/ryan-dusek/
    3 Reasons Why WTI Crude Oil Could Reach $70
    January 15, 2020
    3 Reasons Why WTI Crude Oil Could Reach $70
  • Ryan Dusek
    https://energiesmedia.com/author/ryan-dusek/
    Have Crude Oil Prices Peaked?
    June 12, 2019
    Have Crude Oil Prices Peaked?
  • Ryan Dusek
    https://energiesmedia.com/author/ryan-dusek/
    At Current Crude Oil Prices, Is It Too Late to Hedge?
    December 16, 2018
    At Current Crude Oil Prices, Is It Too Late to Hedge?
  • Ryan Dusek
    https://energiesmedia.com/author/ryan-dusek/
    54581099 s
    November 21, 2018
    From Bull to Bear: What to Make of the Sell-Off in the Crude Oil Market?
Qatar
ADIPEC

In This Issue

Energies Media Summer 2025

ENERGIES Media (Summer 2025)


Why Energy Companies Need a CX Revolution


Dewey Follett Bartlett, Jr.: Tulsa’s Champion of Independents


ENERGIES Cartoon (Summer 2025)


Maximizing Clean Energy Tax Credits Under the Inflation Reduction Act


Energies Media Interactive Crossword Puzzle – Summer 2025


Bringing Safety Forward in Offshore Operations


Moving Energy Across Space and Time


U.S. Oil Refineries Face Critical Capacity Test Amid Rising Demand


NeverNude Coveralls: A Practical Solution for Everyday Dignity


How to Deploy Next-Gen Energy Savers Without Disrupting Operations


The Hidden Value in Waste Oil: A Sustainable Solution for the Future


Meeting Emergency Preparedness and Response Criteria


Letter from the Managing Editor (Summer 2025)

E-Fuels
InventU
  • Terms
  • Privacy

© 2025 by Energies Media

No Result
View All Result
  • Magazine
    • Digital Magazine
    • Digital Magazine Archive
  • Features
  • Upstream
  • Midstream
  • Downstream
  • Renewable
    • Solar
    • Wind
    • Hydrogen
    • Nuclear
  • People
  • Events
  • Advertise
  • Contact

© 2025 by Energies Media