LONDON: Intercontinental Exchange (ICE) said on Wednesday its new contract, Midland WTI American Gulf Coast futures, will go live in late January.

The contract is part of an industry attempt to develop a new US light sweet index and move away from West Texas Intermediate (WTI) futures linked to landlocked storage in Cushing, Oklahoma, and to reflect US crude exports.

The United States exports 3 million barrels of oil per day.

Last year, WTI futures collapsed deep into negative territory, hitting a low of minus $40 a barrel, for the first time in history as oil demand crashed during global COVID-19 lockdowns. The constrained storage was a key factor in the slump.

The new contract, a restructuring of the ICE Permian WTI crude oil futures, will include oil from Enterprise’s ECHO terminal in Houston in addition to the Magellan Houston terminal.

“We are aiming for the restructure of the Permian WTI contract to become Midland WTI AGC, with the expanded infrastructure backing it, to be effective from late January, subject to regulatory approval,” said Jeff Barbuto, global head of oil markets at ICE.

Adding ECHO will increase the inbound supply capacity which underpins the contract to more than 4 million barrels per day (bpd). The combination of Magellan and Enterprise along with additional linked infrastructure will bring the total crude storage capacity to about 150 million barrels in the Houston area.

Early this year, Magellan Midstream and Enterprise Products said they planned to jointly develop a futures contract for physical crude in the Houston area.

In June, the two firms agreed to establish this contract with ICE.

Prior to that, ICE and the CME Group Inc had launched two competing contracts. ICE’s Permian WTI, rolled out in 2018 with settlement and deliver at Magellan, failed to take off owing to low liquidity. Similarly, the CME had a separate contract with Enterprise.