ICE Midland WTI (HOU) Hits Record Open Interest as Market Participants Expand Positions in ICE HOU

Rhea-AI Summary

Intercontinental Exchange (NYSE: ICE) announced that its ICE Midland WTI (ICE:HOU) crude futures contract achieved a record open interest of 158,208 contracts on June 13, 2024. This milestone follows a significant addition of over 100,000 lots last week. The average daily volume (ADV) for ICE HOU has seen impressive growth, climbing from 1,794 contracts in 2022 to 27,560 in May 2024. The Houston market has evolved considerably, with increased production, expanded infrastructure, and a lifted U.S. export ban contributing to the U.S. exporting 4.2 million barrels of Midland WTI daily. ICE HOU offers high optionality, delivering physical crude into major Gulf Coast terminals. The contract also provides margin offsets up to 98% when cleared alongside other ICE oil positions. Overall, ICE’s global oil complex open interest has risen to 14.4 million contracts, reflecting a 24% year-over-year increase.

Positive

• Record open interest of 158,208 contracts for ICE HOU on June 13, 2024.
• Average daily volume increased from 1,794 in 2022 to 27,560 in May 2024.
• U.S. exports 4.2 million barrels of Midland WTI daily.
• ICE HOU provides high optionality and margin offsets up to 98%.
• ICE’s global oil complex open interest increased by 24% year-over-year.

Negative

• None.

Financial Analyst

The record open interest in ICE Midland WTI (HOU) crude futures contract indicates a significant shift in market dynamics. The jump from an average daily volume (ADV) of 1,794 in 2022 to 27,560 in May 2024 shows strong growth. For investors, this could mean increased liquidity and stability in trading these contracts.

Open interest refers to the total number of outstanding derivative contracts, such as options or futures, that have not been settled. A high open interest indicates more participants and active trading, which usually translates to more accurate pricing and lower volatility. These factors are important for investors seeking to hedge against price movements or speculate.

Moreover, the margin offsets as high as 98% when clearing HOU alongside other oil positions at ICE can significantly reduce the cost of trading, making it more attractive for large institutional investors. This can result in increased participation, thereby supporting the contract's liquidity further.

Market Research Analyst

The fact that ICE Midland WTI (HOU) is the only exchange-guaranteed source of ratably deliverable Midland WTI highlights its unique position in the market. This uniqueness can drive even more market participants to prefer HOU over other options. The connection to major terminals like MEH and ECHO and the ability to deliver Midland WTI into Brent, provides additional flexibility and optionality for traders, making this contract even more appealing.

A key concept here is the Exchange for Physicals (EFPs), which allows oil traders to switch futures positions for physical delivery. This flexibility is valuable for managing logistics and delivery schedules, especially when dealing with large volumes as seen in the 12 million barrels being delivered against HOU futures each month.

HOUSTON--(BUSINESS WIRE)-- Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of technology and data, today announced that its ICE Midland WTI (ICE:HOU) crude futures contract hit record open interest of 158,208 contracts on June 13, 2024, after market participants last week added over 100,000 lots of HOU to their books.

ICE HOU has grown from average daily volume (ADV) of 1,794 in 2022, to ADV of 6,695 contracts in 2023, to record ADV of 27,560 during the month of May 2024.

“Customers are moving positions to ICE HOU as the contract offers them greater optionality,” said Jeff Barbuto, Global Head of Oil Markets at ICE. “The Houston market has changed fundamentally since price reporting agencies started assessing Midland WTI in Houston roughly 15 years ago. Since then, production shipped to Houston has surged, infrastructure has expanded to multiple times its previous capacity, the U.S. export ban was lifted, all contributing to the U.S. exporting on average 4.2 million barrels per day, with the majority of that being Midland WTI.”

ICE HOU pricing reflects current fundamentals in Houston, delivering physical crude into two of the biggest crude oil systems on the U.S. Gulf Coast, the ONEOK Magellan East Houston (MEH) and Enterprise Crude Houston (ECHO) terminals. Both are connected to Platts-approved water terminals to deliver Midland WTI into Brent. HOU is the only exchange-guaranteed source of ratably deliverable Midland WTI, with the quality spec of HOU matching the Platts spec for Midland WTI.

Over 12 million barrels of crude are being delivered against HOU futures each month. This includes EFPs (Exchange for Physicals), which allows customers the flexibility to deliver barrels to other locations, as well as flexible delivery dates. Meanwhile, ICE HOU time spreads, as well as spreads with Brent and WTI Cushing (Domestic Sweet), help customers mitigate price risk between locations and grades.

Customers can benefit from margin offsets as high as 98% when clearing HOU alongside other oil positions cleared at ICE. Offsets are available across a range of over 800 oil contracts, including ICE Brent, ICE Gasoil, ICE WTI (Cushing), ICE Dubai (Platts), and ICE Murban, as well as NY Harbor RBOB Gasoline and Heating Oil.

Across ICE’s global oil complex, open interest stands at 14.4 million contracts, up 24% y/y. Alongside record highs in Midland WTI, ICE’s WTI (Cushing) futures contract hit record open interest of 793,288 contracts on June 10, 2024. Oil is one part of ICE’s extensive global commodity markets where OI stands at 62 million contracts, up 26% y/y. Meanwhile, ICE’s total futures and options hit record open interest of 98.4 million contracts on June 13, 2024.

About Intercontinental Exchange

Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks that connect people to opportunity. We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency. ICE’s futures, equity, and options exchanges – including the New York Stock Exchange – and clearing houses help people invest, raise capital and manage risk. We offer some of the world’s largest markets to trade and clear energy and environmental products. Our fixed income, data services and execution capabilities provide information, analytics and platforms that help our customers streamline processes and capitalize on opportunities. At ICE Mortgage Technology , we are transforming U.S. housing finance, from initial consumer engagement through loan production, closing, registration and the long-term servicing relationship. Together, ICE transforms, streamlines and automates industries to connect our customers to opportunity.

Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here . Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 – Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 8, 2024.

Category: EXCHANGES

ICE- CORP

Source: Intercontinental Exchange

View source version on businesswire.com: https://www.businesswire.com/news/home/20240619065058/en/

ICE Media Contact:

Jess Tatham

jess.tatham@ice.com

+44 7377 947136



ICE Investor Contact:

Katia Gonzalez

katia.gonzalez@ice.com

(678) 981-3882

Source: Intercontinental Exchange

FAQ

What is the latest record open interest for ICE Midland WTI (HOU)?

The latest record open interest for ICE Midland WTI (HOU) is 158,208 contracts as of June 13, 2024.

How has the average daily volume for ICE HOU changed over the years?

The average daily volume for ICE HOU has increased from 1,794 contracts in 2022 to 27,560 in May 2024.

What contributes to the U.S. exporting 4.2 million barrels of Midland WTI daily?

Increased production, expanded infrastructure, and the lifting of the U.S. export ban contribute to the U.S. exporting 4.2 million barrels of Midland WTI daily.

What benefits do customers get from ICE HOU contracts?

Customers benefit from high optionality, flexible delivery dates, physical crude delivery into major Gulf Coast terminals, and margin offsets up to 98% when clearing HOU alongside other ICE oil positions.

How has ICE’s global oil complex open interest changed recently?

ICE’s global oil complex open interest has increased by 24% year-over-year, reaching 14.4 million contracts.