The ARGUS WTI Midland price assessment
The Argus WTI Midland price assessment represents Permian-quality WTI sold for physical delivery in the prompt month at the Enterprise and Plains terminals at Midland, Texas. It is the most actively traded and transparent price assessment published by any pricing service for WTI at Midland, and it reflects the price of unblended “Midland-quality” WTI at a point near the fields where the crude is produced.
Typically, more than 1mn b/d of prompt physical transactions for “Midland-quality WTI”, deliverable at the Midland terminals, are reported to Argus in each trade month. That equates to more than 500 trades each month. This compares with about 100 spot physical cargo trades per year for all the grades comprising the Dated Brent price basket (Brent, Forties, Oseberg, Ekofisk and Troll) – about 50 times more pricing points for WTI Midland than for Dated Brent.
The Argus WTI Midland price reflects the volume-weighted average of all spot physical trades done for WTI at Midland in a given day. The price is expressed as a differential to the relevant Nymex light sweet crude futures settlement price as published in the Argus WTI Formula Basis price, and is found in each day’s Argus Americas Crude and Argus Crude reports.
How is the Argus WTI Midland price assessment used?
The Argus WTI Midland price assessment is used routinely as a pricing element in term physical contracts for WTI in the Permian region as well as for other regional crude grades, such as West Texas Light, condensate and West Texas Sour. The Argus WTI Midland price assessment also provides the settlement mechanism for financial contracts listed on the CME and ICE exchanges. These contracts are used widely by those wanting to participate in the financial trade of WTI or by those who want to hedge exposure to the physical WTI market near to the producing fields in west Texas and eastern New Mexico. Open interest on the financial contracts settling against Argus WTI Midland typically exceeds 300,000 contracts, or 300mn bl of contracted volume.
Additionally, as the most transparent and robust indicator of the price of WTI anywhere near the Permian fields, the Argus WTI Midland price is used in the negotiation of crude export cargo prices, often with adjustment for assumed pipeline transport and terminal costs.
Who should use the Argus WTI Midland price assessment?
Anyone with exposure to light sweet crude from the US Gulf coast will find the Argus WTI Midland price assessment beneficial. Traders, risk managers, planners, analysts, finance officers, senior executives, national, independent and international oil companies, regulators, exchanges and government officials use the Argus WTI Midland price assessment.