Intercontinental Exchange Inc. (ICE) said Tuesday it would rename its Permian West Texas Intermediate (WTI) contract as part of a previously announced plan for the physical delivery of crude in the Houston area.

It is to be rebranded as ICE Midland WTI American Gulf Coast (Midland WTI AGC).

Currently, the ICE Permian WTI futures contract is based on Magellan Midstream Partners LP supply capacity and is deliverable at Magellan’s East Houston (MEH) terminal.

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However, the companies are working to launch the Midland WTI AGC contract (ICE: HOU) early in 2022. They are developing the new offering in response to market demand for a Houston-based index with scale and flow assurance.

“U.S. crude fundamentals have been turned upside down over the last decade and we believe that WTI in Houston has become the most representative price for U.S. domestic crude,” said ICE’s Jeff Barbuto, global head of oil markets. 

“Transparent pricing, deep underlying physical liquidity, expansive storage, and connectivity to local and global demand, mean Midland WTI AGC will offer the market a strong alternative for pricing and managing U.S. crude price risk,” Barbuto said.

As part of the effort, ICE is now working to add the Enterprise Crude Houston (ECHO) terminal as a delivery point, increasing the inbound supply capacity to underpin the contract to more than 4 million b/d of Midland-quality WTI crude.

Supporters of the new contract said that, after the Cushing, OK, WTI contract traded into negative territory in April 2020 amid pandemic fallout, it became clear that the industry needed an alternative.

With both MEH and ECHO as delivery points, ICE said, the futures contract would have export access to 14 ship docks in the Houston area. Together, the Magellan and the Enterprise Products Partners LP Houston distribution systems offer 60 million bbl of combined crude storage capacity. These distribution systems connect to a further 90 million bbl of storage capacity and also provide direct offshore access for exports and floating storage.