Eagle Ford oil market gains transparency
OREANDA-NEWS. A recent increase in traders discussing activity at the Enterprise Crude Houston (ECHO) terminal has provided market participants with a better understanding of the value of Eagle Ford crude in the Houston area.
Active trade of Eagle Ford crude takes place at the ECHO terminal, under the name South Texas Sweet (STS). Until recently, however, the broader market did not regularly discuss the levels and volumes of these Eagle Ford crude transactions.
Argus has heard STS trading or discussed on a regular basis since early April, with the last trade heard taking place yesterday at a premium of 65?/bl to the US benchmark, West Texas Intermediate (WTI) delivered to Cushing, Oklahoma. July-delivered STS has a bid at a premium of 40?/bl and an offer at 70?/bl over the US benchmark this morning.
STS is one of six named domestic crude streams deliverable into the Nymex light sweet crude futures contract, with typical API gravity in the mid 40? range. But STS is unlikely to be delivered in settlement of a Nymex futures contract as it tends to trade at a premium to the Nymex contract.
Domestic Sweet (DSW) blend is the type of crude oil typically found in Cushing, Oklahoma, which qualifies as a deliverable grade for the futures contract. DSW typically consists of light tight oil blended with a smaller amount of heavier Canadian crude to meet the API gravity specification of the Nymex contract. The blend has been associated with various quality issues, reducing the value to refiners, and making unblended grades, such as STS and Permian WTI more valuable.
DSW is also piped to the ECHO terminal from Cushing, where it trades at a discount to STS. The last time Argus heard both DSW and STS trade at the ECHO terminal in the same session, DSW traded at a discount of 50?/bl to STS.
DSW at ECHO is offered at a premium of 55?/bl to the Cushing benchmark this morning, weaker by 15?/bl from the offer for STS at ECHO. No bids were heard for DSW ECHO.
STS tends to trade at a discount to Permian WTI at the Magellan East Houston terminal, in part because the quality of the latter has been more consistent. STS ECHO traded levels have been averaging about 85?/bl under WTI Houston since April. This morning, WTI Houston traded at a premium of $1.30/bl to the US benchmark, 60?/bl under this morning's STS offer.
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