CME Group, LOOP and NEO Markets Reach Definitive Agreement to Develop First-Ever Physically Delivered Crude Oil Storage Futures Contract

Innovative, exchange-traded storage futures contract to be based on crude oil storage capacity at the LOOP Clovelly Hub in Louisiana

Mar 04, 2015, 10:00 ET from CME Group

CHICAGO, March 4, 2015 /PRNewswire/ -- CME Group, the world's leading and most diverse derivatives marketplace, LOOP LLC, operator of the largest privately-owned crude oil terminal in the U.S., and NEO Markets, Inc., a leading online marketplace for U.S. physical oil transactions, today announced they had reached a definitive agreement to develop the first-ever physically delivered crude oil storage futures contract. The new LOOP Crude Oil Storage futures contract will begin trading on Sunday, March 29, 2015, for trade date Monday, March 30, 2015, pending all relevant CFTC regulatory review periods.

This new contract will provide market participants with an innovative, exchange-traded futures contract based on crude oil storage capacity at LOOP's Clovelly Hub in Louisiana, beginning with the May 2015 contract month. Each futures contract will represent the right to store 1,000 barrels of crude oil at the hub for a specific calendar month.

The new storage contract is expected to enhance the liquidity of the existing NYMEX Gulf Coast Sour Crude Oil futures contract, which is physically deliverable at LOOP and will be renamed LOOP Gulf Coast Sour Crude Oil futures. As part of the agreement, CME Group will also broaden the specifications of this sour crude futures contract to include Poseidon, Mars and LOOP Seg 17.

"As global crude oil supply and demand dynamics continue to shift, CME Group remains focused on meeting the risk management needs of our energy customers," said Martin Fraenkel, Managing Director, Global Head of Energy Products, CME Group. "We believe this innovative new solution will help customers manage their physical crude storage price risk, while enhancing price discovery and access to short-term storage capacity along the U.S. Gulf Coast."

"We are pleased to be providing the physical storage capability for this ground-breaking new storage futures contract," said Tom Shaw, President, LOOP LLC. "LOOP's reliability record, unparalleled market connectivity, extensive supply of medium sour crude and significant storage capacity provide the market a unique storage opportunity on the Gulf Coast."

"Together with CME Group and LOOP, we are bringing to market the first-ever storage capacity futures for crude oil," said J. Robert Collins, Jr., Co-CEO and President, NEO Markets, Inc. "By offering storage rights to a broader market through these new futures contracts, we expect to provide greater transparency, ease of access, liquidity, flexibility and security of supply for companies dependent on Gulf Coast oil deliverability."

NEO Markets will be hosting monthly auctions of physical LOOP Sour crude oil storage contracts on its NEO Trader platform. Following the auctions, subsequent over-the-counter transactions can be negotiated via the NEO Trader platform and NEO's voice broker services.

Both contracts will be available for trading electronically via CME Globex as well as submission for clearing through CME ClearPort, and will be listed by and subject to the rules of NYMEX.

About CME Group       
As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex® electronic trading platform, its trading facilities in New York and Chicago, and through its London-based CME Europe derivatives exchange.  CME Group also operates one of the world's leading central counterparty clearing providers through CME Clearing and CME Clearing Europe, which offer clearing and settlement services across asset classes for exchange-traded contracts and over-the-counter derivatives transactions.  These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk.

CME Group is a trademark of CME Group Inc. The Globe Logo, CME, Globex and Chicago Mercantile Exchange are trademarks of Chicago Mercantile Exchange Inc.  CBOT and the Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago, Inc.  NYMEX, New York Mercantile Exchange and ClearPort are registered trademarks of New York Mercantile Exchange, Inc.  COMEX is a trademark of Commodity Exchange, Inc.  All other trademarks are the property of their respective owners. Further information about CME Group (NASDAQ: CME) and its products can be found at www.cmegroup.com.

About LOOP LLC
LOOP LLC owns and operates a deepwater port and associated onshore terminal with significant crude oil handling and re-distribution capabilities in Clovelly, Louisiana.- The Clovelly Hub.

Since beginning operations in 1981, LOOP has become an essential energy transport hub, receiving and storing crude oil for delivery to the nation's refineries. Through operational excellence, LOOP has safely received and delivered over 11 billion barrels of crude oil to America's refineries for production of gasoline, diesel, home heating fuel, kerosene, asphalt and other petroleum products.

The Clovelly Hub in South Louisiana is the heart of LOOP's crude oil distribution network. With 70 million barrels of storage capacity, the Hub stores crude oil from all over the world and provides ready access to many of the nation's largest refineries. For more information about LOOP visit www.LOOPLLC.com.

About NEO Markets, Inc.
NEO Markets was formed in 2012 to provide oil traders, hedgers, producers, refineries and investors with comprehensive access to the global physical and financial crude oil marketplace. By combining the best assets of HoustonStreet Exchange Inc. with newly developed technology, NEO Markets is deploying a state-of-the-art platform coupled with an innovative voice broker team that eliminates trading friction by providing open access to all of the world's oil markets. 

NEO Markets has created a new marketplace experience offering unprecedented trading speeds, enhanced operational efficiency, comprehensive liquidity and tighter bid ask spreads. It's an entirely new approach that allows access to all oil products in any location on a single screen complimented by coordinated voice broking execution. 

Through its unique integration of bilateral and cleared markets, NEO Markets facilitates tighter bid-ask spreads in the physical crude oil grades and offers substantially reduced total transaction costs than what is currently available in the OTC markets. Additionally, traders will be able to seamlessly manage their price exposure through sophisticated NEO Markets execution features for futures and options trading on CME Group exchanges. Traders can finally take control of their trading and manage execution in any manner they choose. 

Open access and boundless opportunity are now at your fingertips.

CME-G

 

SOURCE CME Group



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