• Specification Changes and Expansion of Listed Months of NYMEX New York Harbor No. 2 Heating Oil Futures and Associated Products

      • To
      • Members, Member Firms and Market Users
      • From
      • Market Regulation Department
      • #
      • SER-6198
      • Notice Date
      • 11 April 2012
      • Effective Date
      • 29 April 2012
    •  
      Effective Sunday, April 29, 2012, for trade date Monday, April 30, 2012, and pending all relevant CFTC regulatory review periods, the New York Mercantile Exchange, Inc. (NYMEX or Exchange) will amend the contract specifications for its New York Harbor Heating Oil futures (HO) contract beginning with the May 2013 HO contract month and expand its listing schedule to the balance of the current year, the next three (3) consecutive years plus one (1) additional contract month. Additionally, the Exchange will expand the listing schedule of certain HO associated products as detailed in the table below.
      The new grade and quality specifications of the HO contract will require delivery of fuel meeting specifications of the Colonial Pipeline's Fungible Grade 61 for Ultra Low Sulfur Diesel (ULSD), beginning with the May 2013 HO delivery month. The Exchange is amending the HO grade and quality specifications in response to changes in environmental regulations in the U.S. Northeast, requiring cleaner, lower sulfur diesel standards for heating oil. 
      Upon transition to lower sulfur grade and quality specifications, the HO contract will serve as a dual-use contract that will be a price reference and hedging instrument for both the Northeast heating oil market, and for the on-road diesel market. The lower sulfur grade and quality specifications will also more closely match diesel specifications in international markets, including the European ULSD market.
      The rule amendment reflecting the new grade and quality specifications (effective with the May 2013 HO contract month) is presented in black-line format below. The new, expanded, listing schedule for HO contract and associated products is provided in the table below.
      Please refer questions on this subject to:
      Research and Product Development
      Dan Brusstar                             Daniel.Brusstar@cmegroup.com                       212.299.2604
      Products and Services
      Howie Hopkins                          Howard.Hopkins@cmegroup.com                      212.299.2351

       
      Chapter 150
      150.03. GRADE AND QUALITY SPECIFICATIONS
      Grade and Quality Specifications through April 2013 Contract Month.
      The oil shall be a hydrocarbon oil free from alkali, mineral acid, grit, fibrous or other foreign matter and shall meet the following physical and chemical properties.
      (A) No. 2 Heating oil
      (1) Gravity: A.P.I. 30°F minimum (A.S.T.M. Test Method D287)
      (2) Flash: 130°F minimum (A.S.T.M. Test Method D93)
      (3) Viscosity: Kinematic, Centistokes at 100°F, minimum 2.0, maximum 3.6 (A.S.T.M. Test Method D445)
      (4) Water and Sediment: .05% maximum (A.S.T.M. Test Method D1796 or D2709)
      (5) Pour Point: 0°F maximum for contract months September through March; 10°F maximum for contract months April through August, (A.S.T.M. Test Method D97)
      (6) Distillation: 10% Point, 480°F maximum; 90% Point, 640°F maximum, End Point 690°F maximum (A.S.T.M. Test Method D86)
      (7) Sulfur: 0.20% maximum (A.S.T.M. Test Method D129, D1552, D1266, D2622 or D4294)
      (8) Stability: (i) Thermal Stability: 90 minutes 300°F Pad rating 7 maximum (DuPont Test Method); or (ii) Oxidation Stability: mg/100ml., 2.5 maximum (A.S.T.M. Test Method D2274);
      (9) Haze Rating: 25°C (77°F), Procedure 2, 2 maximum (A.S.T.M. Test Method D4176);
      (10) Carbon Residue: Weight% on 10% Bottom, 0.35 maximum (A.S.T.M. Test Method D524 or D4530);
      (11) Ash: 0.01 wt. % maximum (A.S.T.M. Test Method D482);
      (12) Corrosion: 3 hours 50°C (122°F), 1 maximum (A.S.T.M. Test Method D130).
      (13) Cloud Point: 15°F maximum for contract months September through March; 20°F maximum for contract months April through August. (A.S.T.M. Test Method D2500)
      (14) Dye: All heating oil delivered against this contract, regardless of sulfur content, shall be dyed in satisfaction of the dyeing requirements as prescribed by the Internal Revenue Service (IRS) for tax-free sales or uses of diesel fuel (using the Petro Spec dye analyzer or the IRS Test Method), pursuant to Section 4082 of the Internal Revenue Code of 1986, as amended.
      (B) (1) A.S.T.M. refers to the American Society for Testing Materials.
      (2) A.P.I. refers to the American Petroleum Institute.
      (3) DuPont refers to Petroleum Chemical Division, E.I. DuPont de Nemours & Company (Inc.), Petroleum Laboratory Test Methods.
      Grade and Quality Specification Effective with the May 2013 Contract Month and Beyond.
      The oil delivered shall be a hydrocarbon oil free from alkali, mineral acid, grit, fibrous or other foreign matter, meeting the "Delivery" specifications of the Colonial Pipeline's Fungible Grade 61 for Ultra Low Sulfur Diesel, and being properly designated for sale in New York Harbor in accordance with U.S. Environmental Protection Agency (EPA) regulations. Delivery test results may vary by the smaller of ASTM reproducibility for a given test or any test tolerance as allowed for downstream parties by state or EPA regulations at the point of delivery.



       
      Expansion of Listing Schedule for HO and Associated Products Expansion of Listing Schedule for HO and Associated Products

      Rule
      Contract
      Code
      New Listing Schedule (effective April 30, 2012)
      First Listed Contract Month with NEW grade and quality specifications
      Venue
      150
      New York Harbor ULSD Heating Oil Futures
      HO
      Current Year + 3 Years + 1 Month
      May-2013
      CME ClearPort, Globex, NXPIT
      320
      Heating Oil Option
      OH
      Current Year + 3 Years + 1 Month
      May-2013
      CME ClearPort, Globex, NXPIT
      321
      Heating Oil Average Price Option
      AT
      Current Year + 3 Years
      April-2013
      CME ClearPort, NXPIT
      523
      Heating Oil Crack Spread Swap Futures
      HK
      Current Year + 3 Years
      April-2013
      CME ClearPort, NXPIT
      558
      RBOB Gasoline vs. Heating Oil Swap Futures
      RH
      Current Year + 3 Years
      April-2013
      CME ClearPort, NXPIT
      603
      Heating Oil Calendar Swap Futures
      MP
      Current Year + 3 Years
      April-2013
      CME ClearPort, NXPIT
      725
      Heating Oil Arb: NYMEX Heating Oil vs. ICE Gasoil
      HA
      Current Year + 3 Years
      April-2013
      CME ClearPort, NXPIT
      1097
      Heating Oil vs. Brent Crack Spread Swap Futures
      HOB
      Current Year + 3 Years
      April-2013
      CME ClearPort, NXPIT
      328
      Heating Oil BALMO Swap Futures
      1G
      1 month + following month listed 10 bus days prior to start of month
      April-2013
      CME ClearPort, NXPIT
      329
      Heating Oil Crack Spread BALMO Swap Futures
      1H
      1 month + following month listed 10 bus days prior to start of month
      April-2013
      CME ClearPort, NXPIT
      551
      Heating Oil Look-Alike Option
      LB
      Current Year + 3 Years
      May-2013
      CME ClearPort, NXPIT
      350
      Heating Oil Crack Spread Option
      CH
      Current Year + 3 Years + 1 Month
      May-2013
      CME ClearPort, Globex, NXPIT
      392
      Heating Oil Calendar Spread Option
      FA
      Any one-month spread combination for first 4 listed months
      May-2013
      CME ClearPort, Globex, NXPIT
      392
      Heating Oil Calendar Spread Option
      FB
      Any two-month spread combination for first 4 listed months
      May-2013
      CME ClearPort, NXPIT
      392
      Heating Oil Calendar Spread Option
      FC
      Any three-month spread combination for first 4 listed months
      May-2013
      CME ClearPort, NXPIT
      392
      Heating Oil Calendar Spread Option
      FM
      Jun-Dec spread for first 13 months
      June-2013
      CME ClearPort, NXPIT
      392
      Heating Oil Calendar Spread Option
      FZ
      Dec-Dec spread for first 13 months
      Dec-2013
      CME ClearPort, NXPIT
      523A
      Heating Oil Crack Spread Average Price Option
      3W
      Current Year + 3 Years
      April-2013
      CME ClearPort, NXPIT
      825
      Heating Oil Financial Futures
      BH
      Current Year + 3 Years
      May-2013
      CME ClearPort, NXPIT
      829
      Heating Oil Last Day Financial Futures
      23
      Current Year + 3 Years
      May-2013
      CME ClearPort, NXPIT