UPDATE 1-NYMEX set to adopt new WTI crude oil specs from end-2014
By Jeanine Prezioso
NEW YORK Nov 6 (Reuters) - CME Group Inc plans to announce new specifications and tests for West Texas Intermediate (WTI) crude backing its benchmark oil futures contract early next year, and implement the new specs by the end of 2014, a person familiar with knowledge of the plan said on Wednesday.
The recommended specifications were submitted to the exchange for consideration by the Crude Oil Quality Association (COQA), who began testing crude oil several years ago in an attempt to identify and weed out lower-quality blended crudes that were being delivered to refineries.
WTI is the light, sweet crude oil that underpins the cme's new york mercantile exchange (nymex) futures contract, the most liquid in the world.
The effort to tighten the technical terms for wti has taken on new urgency as a surge in highly variable shale crude and growing volumes of heavy canadian crude flow into cushing, oklahoma, the delivery point.
Concerns about the volume of off-specification or non-deliverable crude in the tanks at cushing has unnerved oil traders several times this year, and cme is planning to phase in the changes in order to avoid alarming the market.
The NYMEX expects to fully implement the new specifications by the end of next year.
The move to change the specifications was prompted, in part, by concern over some in the industry passing off so-called "dumbbell" crudes, oil blended to look like the WTI benchmark that did not run smoothly through a refinery and readily yield oil products such as gasoline and heating oil. Continued...