A new oil futures contract is coming to the Gulf Coast.

Magellan

Magellan Midstream Partners L.P., Enterprise Products Partners LP and Intercontinental Exchange Inc. (ICE) said Monday they would partner to create a contract for the physical delivery of crude in the Houston area.

The companies said the Midland WTI American Gulf Coast contract (ICE: HOU) is expected to launch in early 2022. They are developing the new offering in response to market demand for a Houston-based index with scale and flow assurance. Backers of the new contract said that, after the Cushing, Oklahoma West Texas Intermediate (WTI) contract traded into negative territory in April 2020 amid pandemic fallout, it became clear that the industry needed an alternative.

It “was a wake-up call to the oil industry that...