Today is the first day of reporting for the new crude oil price assessment announced earlier this month by Platts. The new marker has already had its name changed from Americas Sour Marker to Americas Crude Marker (ACM). The marker reflects the price of sour crude in the Gulf Coast region.
The most popular current price marker for US crude is the WTI contract from NYMEX, which is none to happy about the ACM assessment. There is little danger that the ACM benchmark will replace WTI any time soon, if ever. Unless and until ACM becomes a tradeable contract on NYMEX or ICE, there’s virtually no chance that it will replace WTI. And even if ACM were tradeable, both NYMEX and ICE have their own contracts that would compete with the new benchmark.
Because WTI is essentially traded only within the US, the WTI benchmark price is not exposed to the ups and downs of supply and demand in the global market for the more widely available sour crudes. An Americas sour crude benchmark would reflect those effects, and, combined with the more costly refining required for sour crudes, could cause the global market price for crude to rise.
It’s probably too early to predict what effect the ACM benchmark will have on the crude market. But now’s a good time to start paying attention to the price of sour crude from the Gulf Coast.
Paul Ausick
March 16, 2009
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