CME still studying launch of U.S. Gulf Coast futures contracts

Wed Dec 11, 2013 6:00pm EST
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By Kristen Hays

HOUSTON Dec 11 (Reuters) - CME Group is stepping back from the launch of two new crude oil futures contracts to further assess U.S. oil production and infrastructure growth and how it boosts liquidity in Gulf Coast spot markets, executives said on Wednesday.

A light-sweet crude contract and a Canadian heavy crude contract in Houston are still possibilities, said Dan Brusstar, senior director of energy products at CME. But they will not be introduced by the end of 2013, as he said earlier this year.

"We're definitely looking at that opportunity in the next year," he told reporters. "It's a work in progress."

The company wants to launch a Gulf Coast crude futures contract to take advantage of the region's rapidly growing center for trade. It would complement the U.S. benchmark West Texas Intermediate crude futures contract, which is tied to the Cushing, Oklahoma, hub.

The Gulf Coast growth comes as burgeoning U.S. and Canadian oil production pushes more crude to the region, either directly or from glutted Cushing, chipping away at imports that largely fed the nation's biggest refining area just a few years ago.

The company wants more time to seek customer input, monitor the market's liquidity and assess options as more storage, terminals, pipelines and rail projects emerge on the U.S. Gulf Coast, from Houston to Louisiana.

"The key is having multiple people in the market, competition, and some optionality and flexibility mechanism so you can accommodate refiners, traders and marketers in that hub," Brusstar said.   Continued...