New Crude Benchmark in the Works?

Oil industry information leader Platts has proposed establishing a new assessment for sour crude produced in North and South America. The benchmark would be called the Americas Sour Marker (ASM), and includes four sour crudes that Platts already assesses. While ASM is not intended to replace West Texas Intermediate (WTI) as the benchmark price for Americas crude oil, Platts is clearly signaling its intention to minimize the influence of WTI in its assessment processes.

Platts offers two reasons for the proposed change. First, sour crude accounts for about two-thirds of the crude entering US refineries. Second, the company argues that the WTI price does not fully represent US Gulf Coast crude economics.

We noted last month the cost to Americans of having WTI priced lower than foreign crude. Platts is acknowledging that WTI is too rare and too landlocked to serve as the single marker for US crude. The ASM will begin to be quoted on March 16th.

Paul Ausick
March 4, 2009