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U.S. crude

ICE Midland WTI (HOU)

Price and physical supply risk management. Guaranteed deliveries.

The shale revolution has had a profound impact on North America's role in the global crude oil market. With the dramatic shift in U.S. crude fundamentals over the last 12 years, the marginal barrel that sets the domestic price has transitioned to Midland WTI on the U.S. Gulf Coast.

Effectively Manage Crude Supply Risks with ICE HOU

U.S. crude

Market participants in the U.S. physical crude oil sector often encounter challenges related to Midland crude oil supply.

Exporters receive off-spec Midland WTI at U.S. Gulf Coast (USGC) terminals, as reported in the oil trade press, and refiners unexpectedly receive non-ratable volumes of Midland WTI from suppliers, according to market participants.

For those who have faced or are concerned about such issues, the ICE Midland WTI Futures contract (HOU) provides a viable solution to mitigate these risks.

Address Production Issues with Assured Physical Delivery of On-Spec Midland WTI

The HOU contract serves as a benchmark for Midland-origin and Midland-quality crude production and exports. Its pricing and physical delivery point is in Houston, the most active crude trading hub on the USGC. Going to expiry in the HOU contract guarantees the physical delivery of on-spec and ratably delivered Midland WTI crude oil. This oil can be utilized in U.S. domestic refineries or exported to European and Asian refiners. Additionally, in the Atlantic Basin, Midland WTI is deliverable into the Brent complex.

Deliveries of Midland WTI crude oil through the HOU contract averaged 4.4 million barrels each month in the second half of 2023. ICE, as a regulated exchange and clearinghouse, provides anonymous trading and clearing with stringent procedures in place. This ensures a robust, fair, and transparent marketplace with clear protocols for physical delivery. Notably, every HOU delivery accrues interest on delivery margins at the ICE deposit rate.

Beyond managing price risk, HOU effectively addresses physical supply risk. Guaranteed deliveries of on-spec Midland WTI crude via HOU contribute to timely loading of export vessels, averting demurrage fees. Refineries in the U.S., Europe, and Asia receive crude volumes as planned, on-spec and at the agreed-upon volumes and delivery timeframe, facilitating smooth operations.

ICE Midland WTI American Gulf Coast futures (code: HOU)
Average Daily Volumes & Open Interest
ICE Midland WTI American Gulf Coast futures (code: HOU)
Physical Delivery

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Contact us for any questions about Midland WTI.

HOU Delivery - How it works

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HOU will always expire three business days before the 25th day of the month. If you still have a position post this time, there are still plenty of options:

  • You have until 1pm CST the day after expiry to execute an Exchange for Physical (EFP) which offer additional flexibility to deliver barrels to other locations and delivery dates.. This is also the time that you must declare what location you want to take and make delivery at the ECHO or MEH terminals.
  • If you have not entered an EFP by 2pm CST on the same day, ICE will notify clearing members whom you have been matched up with.
  • It does not matter if you have been matched with someone who have chosen a different location for delivery. With the HOU contract, every mismatched buyer whether they have entered an EFP or gone to delivery is guaranteed a free pumpover to the terminal or their choice (ECHO or MEH). The waiver also applies to customers who take delivery of HOU via ICE’s Exchange for Physical (EFP) and Alternative Delivery Procedure (ADP) mechanisms. If the buyer executes an EFP or ADP with a seller at a non-preferred terminal, the buyer may transfer the barrels to the other terminal at no cost. See Pump Over Fee Waiver for more details.
  • Once you have been matched, you have the option to enter an ADP (Alternative Delivery Procedure). An ADP can be executed any time after matchup until the end of the delivery period.
  • If no EFP or ADP is executed, then you continue through the delivery process under the HOU contract rules guaranteeing you ratable and on spec Midland crude oil.

Please see Magellan Midstream Partners, L.P. (magellanlp.com) and HOU Futures Contract and General Transfers (enterpriseproducts.com) for more details.

Margin and offsets

Customers can benefit from margin offsets as high as 95% when clearing HOU alongside other oil positions cleared at ICE Clear Europe, with offsets across a range of 700 oil contracts, including ICE Brent, ICE Gasoil, ICE WTI, ICE Dubai (Platts), ICE Murban, as well as RBOB Gasoline.

WTI Crude Quality Readings

WTI (West Texas Intermediate) Crude Quality Readings are crucial metrics used in the oil and gas industry to assess the physical and chemical characteristics of WTI crude oil. These readings provide essential information about the oil's composition, including its density, viscosity, sulfur content, and other key properties. Investors, traders, and energy professionals closely monitor these quality readings as they significantly impact the pricing and trading of WTI crude oil in the global market. The data derived from these readings helps market participants make informed decisions about refining processes, transportation, and overall market dynamics. Accurate WTI Crude Quality Readings play a pivotal role in shaping the energy landscape, influencing investment strategies, and ensuring the efficient functioning of the oil market.

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ICE Midland WTI (HOU)

Additional Inter-commodity spreads will be offered to help customers mitigate price risk between various locations and grades:

  • Midland WTI HOU vs ICE WTI Futures (Cushing) - price and quality differential between Mid-continent WTI vs Houston WTI
  • Midland WTI HOU vs ICE Brent Futures - U.S. crude where it meets the water vs the global crude oil benchmark

Related content

Midland WTI into Brent: A Practical Trading Guide

Now Midland WTI can be delivered into the largest and most liquid oil contract in the world. ICE Midland WTI (Code: HOU) enables participants to directly price and hedge the marginal domestic barrel of Midland quality crude that meets Platts Midland specifications accepted into Dated Brent.

ICE Midland WTI (HOU) Futures and the inclusion of Midland in the Brent Complex

Last year, at a conference organized by Crude Oil Quality, Mike Wittner, ICE’s Global Head of Oil Market Research, provided insights into the inclusion of Midland WTI into the Brent complex. Below, we summarize the key points from his presentation.

Midland WTI into Brent: A Practical Trading Guide

The ICE Permian WTI crude futures contract (ICE: HOU) has been restructured and renamed the ICE Midland WTI American Gulf Coast (HOU) crude futures contract. Watch our webinar to learn how the restructured contract offers the market a strong alternative for pricing and managing U.S. crude price risk.

Midland WTI into Brent: A Practical Trading Guide

Now Midland WTI can be delivered into the largest and most liquid oil contract in the world. ICE Midland WTI (Code: HOU) enables participants to directly price and hedge the marginal domestic barrel of Midland quality crude that meets Platts Midland specifications accepted into Dated Brent.

ICE Midland WTI (HOU) Futures and the inclusion of Midland in the Brent Complex

Last year, at a conference organized by Crude Oil Quality, Mike Wittner, ICE’s Global Head of Oil Market Research, provided insights into the inclusion of Midland WTI into the Brent complex. Below, we summarize the key points from his presentation.

Midland WTI into Brent: A Practical Trading Guide

The ICE Permian WTI crude futures contract (ICE: HOU) has been restructured and renamed the ICE Midland WTI American Gulf Coast (HOU) crude futures contract. Watch our webinar to learn how the restructured contract offers the market a strong alternative for pricing and managing U.S. crude price risk.
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