• Amendment to Grade and Quality Specification of NYMEX New York Harbor ULSD Heating Oil Futures Beginning with the May 2013 Contract Month and Beyond

      • To
      • Members, Member Firms and Market Users
      • From
      • Products & Services and Research & Product Development
      • #
      • SER-6529
      • Notice Date
      • 15 January 2013
      • Effective Date
      • 15 January 2013
    • Effective starting with deliveries against the May 2013 contract month and beyond, 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 ULSD Heating Oil futures (HO) contract -) under NYMEX Rule 150101.B to reflect Colonial Pipeline’s Fungible Grade 62 for Ultra-low Sulfur Diesel (ULSD) containing no renewable fuel content.
      The revised grade and quality specifications of the HO contract will require delivery of ULSD with no renewable fuel or biodiesel content, meeting specifications of the Colonial Pipeline's Fungible Grade 62 for ULSD, beginning with the May 2013 contract month and beyond.  The Exchange is amending the grade and quality specifications in response to changes in the Colonial Pipeline’s specifications for ULSD to ensure delivery of diesel fuel with no renewable fuel content. 
      Upon transition to the ULSD specifications with no renewable fuel content, 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 ULSD specifications will also more closely match diesel specifications in international markets, including the European ULSD market.
      The rule amendment reflecting the revised grade and quality specifications (effective with the May 2013 contract month and beyond) is presented in black-line format 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


       
      (bold/underline indicates addition; strikethrough indicates deletion)
      Chapter 150
      150101. CONTRACT SPECIFICATIONS
      The term ”ASTM” refers to the American Society for Testing Materials.
      150101.A.   Grade and Quality Specifications through April 2013 Contract Month – No. 2 Heating Oil
      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.
      The term “API” refers to the American Petroleum Institute.
      The term “DuPont” refers to Petroleum Chemical Division, E.I. DuPont de Nemours & Company (Inc.), Petroleum Laboratory Test Methods.
      (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.
       
      150101.B.   Grade and Quality Specification Effective with the May 2013 Contract Month and Beyond –
      Ultra Low Sulfur Diesel
       

      The oil delivered shall be a pure hydrocarbon oil free from renewable fuel, biodiesel, alkali, mineral acid, grit, fibrous or other foreign matter, meeting the "Delivery" specifications of the Colonial Pipeline's Fungible Grade 62 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.

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