- Why is NYMEX adding the Plains Cushing terminal to the Light Sweet Crude Oil futures contract (Code CL)?
- When will this change go into effect?
- Will there be any change to the CL contract’s quality specifications?
- What if I have no intention of taking delivery under the CL contract, will this change impact me?
- Will the addition of the Plains Cushing terminal impact the economic value of the CL contract?
- What is the storage, inbound, and outbound capacity of the Plains Cushing terminal?
- How do I make or take delivery at the CL contract’s new Plains Cushing terminal?
- Does this addition impact existing delivery locations of the CL contract?
1. Why is NYMEX adding the Plains Cushing terminal to the Light Sweet Crude Oil futures contract (Code CL)?
Including the Plains Cushing terminal as a delivery location for the CL contract offers market participants additional optionality when using the delivery mechanism for the world’s most liquid crude oil futures benchmark. The terminal not only provides additional in-tank delivery options, it also is well connected to existing Cushing delivery locations, as well as inbound and outbound pipelines.
2. When will this change go into effect?
This change will take effect November 8, 2021 commencing with the February 2022 contract month.
3. Will there be any change to the CL contract’s quality specifications?
There will be no change to the CL contract’s quality specifications.
4. What if I have no intention of taking delivery under the CL contract, will this change impact me?
The addition of the Plains Cushing terminal introduces additional delivery optionality and will have no impact on positions that are offset prior to expiration.
5. Will the addition of the Plains Cushing terminal impact the economic value of the CL contract?
The addition of the Plains Cushing terminal will have no impact on the economic value of the CL contract.
6. What is the storage, inbound, and outbound capacity of the Plains Cushing terminal?
- 100 tanks in service.
- Plains has a total of 23 mainline interstate pipeline interconnects at the Cushing hub of which 11 are inbound and 12 are outbound, respectively. In addition, Plains has direct connections to 15 major storage terminals at the Cushing hub.
- Total current capacity of 27.2 million barrels of storage.
- The facility can receive 3.8 million barrels per day and deliver 3.6 million barrels per day at full line rates, but it is capacity-restricted based on receiving companies. It is estimated that approximately 4.0 million barrels per day of average daily volume traverses through the Plains manifold.
7. How do I make or take delivery at the CL contract’s new Plains Cushing terminal?
Prior to expiration of the CL contract, a participant must have secured either applicable pipeline capacity and/or storage to make or take delivery at the Plains Cushing terminal.
After expiration, the buyers and sellers must submit a Notice of Intent to make or take delivery at the Plains location to their clearing member. If a buyer that wishes to take delivery at Plains is matched with a seller that elects an alternative NYMEX delivery location, the buyer can pay a pump over fee and still receive the crude oil at the Plains location.
Please refer to chapter 200 of the NYMEX rulebook for more detailed information on the delivery procedure.
8. Does this addition impact existing delivery locations of the CL contract?
The addition of the Plains Cushing terminal has no impact on the existing delivery locations that are hosted by Enbridge and Enterprise. The Plains Cushing terminal has connectivity to both locations.
Additional information may be viewed in SER 8872.
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
