NYMEX parent CME Group will likely implement additional quality specifications on its light sweet crude futures starting with the January 2014 contract, a member of the Crude Oil Quality Association's board said Thursday.
CME plans to announce the changes in the "next few months," said Dennis Sutton, who is also manager of feedstock quality for Marathon Petroleum.
His comments came during COQA's meeting in Seattle. CME was not immediately available to comment on Sutton's remarks.
The additional quality specifications would be a long-awaited win for the industry group, which includes representatives from major US refiners. COQA recommended comprehensive specifications for the NYMEX light sweet contract in 2010, given increased blending of Canadian oil and other grades at Cushing, Oklahoma, the delivery point for the NYMEX crude contract.
That proposal included a micro carbon residue limit of 2.4% or less by weight, a total acid number of 0.28 mg KOH/g or less, a nickel content of 8 ppm or less, vanadium content of 15 ppm or less and a high temperature simulated distillation yield of 50% between 470 and 570 F.
The contract currently has specifications for API gravity, sulfur content, pour point, viscosity and vapor pressure.
"I believe that clearly the NYMEX contract is out of date," Sutton said. "The world has changed, and they need to update some things."
What's changed, in part, is the growing production of tight oil shale production in the US and its connectivity to the Cushing hub, Sutton said.
Historically, domestic sweet crude was a blend of various sweet crudes, mostly from West Texas, Oklahoma and the surrounding areas.
Late last year, Dan Brusstar, director of CME Group energy research and product development, said customers have indicated that Bakken Shale crude from North Dakota is being blended into the common domestic streams at Cushing.
At the time, Brusstar also said CME expected to finalize additional specifications for the domestic sweet crude with implementation early in the 2013 second quarter.
