CME Crude Auction FAQ

  • 10 Jan 2019
  • By CME Group
  • Topics: Energy

1. What is the CME Auction?

The CME Auction is an anonymous matching platform that provides an open venue for bilateral physical transactions. The initial energy auction will host export cargoes offered by Enterprise Products LLC for FOB loading U.S. light sweet crude oil from their Houston terminal.

The underlying technology has been used to facilitate numerous auctions including daily auctions for Chicago dairy, Irish electricity CFDs and DME oil auctions.

2. What are the advantages offered by using CME Auction for cargoes?

With the CME Auction, users will be able participate in a competitive auction process with the following advantages:

  • Low-cost access to international markets
  • Simple and user-friendly interface
  • Better transparency in trade
  • Retain control by setting the floor and ceiling prices 
  • Maximize reach and revenue while still maintaining control of the process

3. Who is Enterprise Products Partners LP?

Enterprise Products Partners LP (NYSE: EPD) is one of the largest midstream energy companies in the world and a leading North American provider of services linking producers and consumers to a full range of hydrocarbon products, including crude oil. Assets include approximately 50,000 miles of pipelines; 260 million barrels of storage capacity for crude oil, NGLs, refined products and petrochemicals; and 14 billion cubic feet of natural gas storage capacity.

With a network of 19 ship docks along the Gulf Coast, Enterprise is the largest exporter of crude oil in the nation and the leader in crude infrastructure in the Houston area. Through its network of pipelines, storage and marine terminals, Enterprise has the capability to aggregate more than 4 million barrels per day (BPD) of various grades of crude oil, averaging more than 800,000 BPD of exports in Q2 2018. The company has access to approximately 45 million barrels of crude oil storage, 24 million barrels of which are located in Houston.

The ECHO terminal, which has 7.4 million barrels of crude oil storage, is connected to every refinery in the Houston area, as well as a network of pipelines linking the major producing basins, to Enterprise’s terminals and import/export docks. From the Permian Basin, Enterprise transports crude oil to Houston through the Midland-to-ECHO pipeline system, which has 575,000 BPD of capacity.

4. What is Enterprise’s role in the first auction?

Enterprise is the seller of U.S. Gulf Coast light sweet crude oil in the first auction. The first delivery will also be made from the Enterprise Houston Ship Channel (EHSC) terminal.

For details on Enterprise’s general terms and conditions, please see Chapter 5 of the Auction Policy document on Energy Auction website.

Learn more about Enterprise.

5. What product will be offered in the first auction?

The first auction will feature light sweet crude oil from Midland, Texas offered through the Enterprise Houston Ship Channel (EHSC) terminal. The specification will be held to the standards of the WTI Houston (HCL) futures contract. More detailed specifications and an assay will be provided to buyers as the auction date gets closer.

6. How long does the auction run?

While parameters can be adjusted, the initial auctions will run for a two-minute period. If a bid comes within the last five seconds of the auction, the auction will automatically be extended another five seconds. The time will continue to extend in five-second increments if new bids are entered.

7. Who facilitates actual delivery of products following the auction?

Once the auction is complete, CME Auction staff will share the successful bidder’s details with the seller. The seller and successful bidder must then confirm any final details relating to delivery and payment terms.

8. Will the auction results be posted anywhere?

Initially, the winning bid will be posted on the CME Energy Auction webpage.

9. What are the fees associated with the Auction?

Fees can be found on the CME Auction fee web page.

10. How does a firm participate as a buyer in the auction?

The participation process is outlined on the CME Energy Auction web page.

11. Once enrolled, how do I view the platform?

Once registered and approved, participants can access live auctions through CME One  or CME Direct.

12. How does a firm participate as a seller in the auction?

If your firm is interested in participating as a seller on CME Auction, contact EnergyAuction@cmegroup.com.

About CME Group

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