Energy and metals information provider Platts, a division of The McGraw-Hill Companies, Inc., US, has announced that it will publish a new daily oil price assessment – Platts Light Houston Sweet – that reflects the value of light sweet crude flowing from inland domestic production centers to Houston, Texas.
Platts Light Houston Sweet (LHS) is the latest in a series of assessments launched by Platts in response to the significant structural shifts taking place in the US crude market as 'tight oil' exploration and development has dramatically increased domestic production and reshaped traditional crude flows and refinery demand patterns. According to the U.S. Energy Information Administration, domestic U.S. crude oil production has reached 7.5 million barrels per day (b/d) as of July 19, the highest levels since 1989.
Houston, currently the location for several Americas refined products benchmarks, is the largest refining center in the U.S. with 2.2 million b/d of refining capacity. With the rebirth of US crude production nearby, the Gulf Coast port city is undergoing a massive infrastructure renaissance, evidenced by the development of 31 million barrels of crude oil storage and the expansion of local pipeline capacity between storage terminals and refineries by the middle of 2014. Pipelines, including Enterprise/Enbridge's Seaway and Magellan's Longhorn, are connecting inland production centers to the U.S. Gulf Coast, with Houston as the main target of these shifting crude oil flows.
Platts uses WTI Midland specifications at East Houston in its LHS assessment, and may normalize Domestic Light Sweet and Eagle Ford bids, offers, and transactions at Houston to a WTI Midland specification basis. The quality specification basis for WTI Midland at Houston is detailed in a subscriber note issued by Platts earlier.
On July 1, Platts introduced a daily assessment reflecting the value of U.S. Gulf Coast propane gas cargoes loading at major U.S. Gulf Coast export centers. Like the LHS assessment, the propane assessment responds to the dramatic increase in U.S. production, specifically significant growth in propane production which has transformed the U.S. from a net importer to a net exporter of propane.
Both the Platts LHS and propane assessments were developed using its Market-on-Close (MOC) methodology, a highly-structured, transparent price assessment process based on the principle that price is a function of time. The MOC process in oil identifies bid, offer and transaction data by company of origin and results in a time-sensitive, end-of-trading-day daily price assessment.
The assessments are published in numerous Platts publications including Global Alert, a real-time news service; Platts Market Data - Oil, a data delivery service; and the publications Platts Crude Oil Marketwire, North American Crude Wire, and Platts Oilgram Price Report.
