Intra-month price risk management with BALMO WTI Midland (WTT) and WTI Houston (HTT) vs. WTI futures

Key Features

  • Flexibility to target exposure to certain days within a month 
  • Manage intra-month exposure from production or cargo volume variances 
  • Choose from calendar month or trade month structures 
  • Align hedges precisely to the timing of cargo loadings or tank transfers 
  • Netting with full month contract equivalent for margins and position limits
Location Period Clearport Related Full-Month Code
WTI Houston Trade Month Balmo HTB HTT
WTI Houston Calendar Month Balmo HIB HIL
WTI Midland Trade Month Balmo WTB WTT
WTI Midland Calendar Month Balmo FFB FF

Use Cases for BALMO futures

EXAMPLE 1: PRODUCTION BALANCING

A trader has a term contract to buy production from a Midland basin producer at Argus WTI Midland. For calendar December, he sold 100,000 barrels of WTTZ22 to hedge his purchase. On November 16, he learns the December supply will be greater than expected at 104,000. He is now long 4,000 barrels and sells four lots of WTBV2216 to hedge his additional exposure.

EXAMPLE 2: CARGO BALANCING

A trader has agreed to buy a 700,000 barrel cargo of WTI Midland FOB Houston in December. To lock in Gulf Coast basis risk, he sells 700 HTTZ22. On November 12, his supplier informs him there will only be 695,000 barrels. He buys five lots of HTBV2212 to cover his short exposure.

Contract Pricing Day Example: WTI Houston (Argus) vs. WTI

    27-Dec 28-Dec 29-Dec 30-Dec 02-Jan 03-Jan 04-Jan 05-Jan 06-Jan 09-Jan 10-Jan 11-Jan 12-Jan 13-Jan 17-Jan 18-Jan 19-Jan 20-Jan 23-Jan 24-Jan 25-Jan 26-Jan 27-Jan 30-Jan 31-Jan
Trade Month Future HTTG3 x x x x x x x x x x x x x x x x x x x x x        
Trade Month BALMO HTBF2306                 x x x x x x x x x x x x x        
Financial Future HILF3         x x x x x x x x x x x x x x x x x x x x x
BALMO Financial Future HIBF2311                       x x x x x x x x x x x x x x

BALMO Contract Listing Convention:

Contract Month

Product Code

Selected Start Date

Termination of Trading

Trade Month

Related Full-month Product Code

Aug 2022

HTBQ2229

8/29/2022

9/23/2022

September

HTTV22

Sep 2022

HTBU2207

9/07/2022

9/23/2022

September

HTTV22

Sep 2022

WTBU2227

9/27/2022

10/25/2022

October

WTTX22

Oct 2022

WTBV2212

10/12/2022

10/25/2022

October

WTTX22

For more information, please contact energy@cmegroup.com


Balance of the month cash settled futures contracts are based on the Argus daily assessment prices for WTI Houston and WTI Houston differential weighted averages.

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.

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