ICE Midland WTI (HOU) Hits Record Open Interest as Market Participants Expand Positions in ICE HOU
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.
- 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.
- None.
Insights
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.
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.
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
ICE HOU pricing reflects current fundamentals in
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
Across ICE’s global oil complex, open interest stands at 14.4 million contracts, up
About Intercontinental Exchange
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Category: EXCHANGES
ICE- CORP
Source: Intercontinental Exchange
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Source: Intercontinental Exchange
FAQ
What is the latest record open interest for ICE Midland WTI (HOU)?
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What contributes to the U.S. exporting 4.2 million barrels of Midland WTI daily?
What benefits do customers get from ICE HOU contracts?
How has ICE’s global oil complex open interest changed recently?
