US Gulf Coast crude oil gets its own benchmark

S&P World Platts and Argus Media will launch new benchmarks for pricing US crude oil

S&P World Platts and Argus Media will launch new benchmarks for pricing US crude oil that is becoming exported to substitute the West Texas Intermediate benchmark.

WTI serves as a basis, but it is, in truth, connected to oil sent to the Cushing, Oklahoma, storage hub.

Reuters reports that oil shipments from the US Gulf Coast are only quoted as a premium or price cut to West Texas Intermediate, based on crudes developed in Texas, Louisiana, and North Dakota. However Cushing has declined in relevance many thanks to the shale oil increase, which has produced the United States an exporter of crude the moment once more.

“Traders will now have the option of a new benchmark that will characterize the totality of the Gulf Coast market,” the head of Americas at Argus Media, Euan Craik, instructed Reuters.

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The Argus benchmark, according to the report, will consist of oil saved at seven spots along the Gulf Coast, which include the East Houston terminal operated by Magellan Midstream Companions, a few terminals that are property of Business Products Companions, and a few offshore facilities in Houston, Seabrook, and Texas Metropolis. At a afterwards stage, two far more spots will be extra to the list, which include the Corpus Christi terminal and Nederland in Texas.

Platts’ benchmark, dubbed Platts American Gulf Coast Select, or AGS, will be based on light sweet crude developed in the Permian basin and transported by pipeline to the Gulf Coast.

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“Cushing has for quite a few many years unsuccessful to characterize the economics of crude oil in this market. Current market individuals have called for a benchmark that appropriately reflects the core of the physical market in the Gulf Coast, somewhat than a landlocked economical worth,” the Americas editorial director of Platts, Richard Swann, instructed Reuters.

The new benchmarks will find to place US oil for export on a far more equivalent footing with Brent crude, which is at the moment applied for the pricing of far more than fifty % of the oil exported all over the earth.

This short article was at first revealed on Oilprice.com