S&P Global Platts is proposing to launch an assessment of WTI Midland FOB Rotterdam that would be published in conjunction with its existing WTI Midland DAP basis Rotterdam assessments, starting February 3, 2020.
This assessment would be published as both an outright price and as a differential to Dated Brent for 600,000-barrel cargoes loading FOB from land-based storage at Rotterdam 10 days forward from date of publication to one month ahead.
The assessment would reflect bids, offers and trades for WTI Midland FOB Rotterdam, as well as DAP Rotterdam adjusted for freight. Should a firm DAP Rotterdam offer for WTI Midland -- after adjusting for freight, port fees and sailing time -- be more competitive than a comparable bid for the grade on an FOB basis, the DAP Rotterdam offer would take precedence in the final assessment of WTI Midland on the loading dates in question.
In the absence of prompt market information, Platts would assess WTI Midland FOB basis Rotterdam as a differential to its existing DAP Rotterdam WTI Midland assessment, accounting for the difference in market structure, and using a cross Rotterdam freight adjustment factor.
FREIGHT ADJUSTMENT FACTOR (FAF): Platts would publish a freight adjustment factor for WTI Midland, in line with the factors for current North Sea CIF Rotterdam grades, at 80% of the relevant freight rate. Platts publishes a 10-day rolling freight average the day before each day's Market on Close assessment process, to ensure the freight factor is fully known before the assessment process begins. For WTI Midland FOB Rotterdam, this would be based on its 10 previous assessments of the Dirty Cross-UK/Continent 80,000 mt Worldscale freight assessment, applied to the Platts assessment of the Rotterdam crossharbour rate.
PRICING BASIS: Platts would publish assessments for WTI FOB Rotterdam as an outright price, as a spread to Dated Brent, and as a spread to Cash BFOE. Platts may publish bids and offers on each of these bases or as a differential to any commonly used pricing mechanism including ICE Brent futures.
VOLUME: The WTI FOB Rotterdam assessment would reflect a typical Aframax cargo of 600,000 barrels with +/-1% operational tolerance at seller's option.
OIL QUALITY: Platts standards for WTI Midland cargoes globally reflect crude originating from one of four pipelines along the US Gulf Coast: BridgeTex, Cactus, Longhorn and Sealy-ECHO. The origin pipelines referenced in the assessments may be expanded or modified over time to reflect market-accepted sources of Midland-quality crude shipped directly from the Permian Basin as Texas' crude oil infrastructure evolves. Cactus II and Midland-to-Echo II will be included effective January 2.
PREVIOUSLY-LOADED OIL: As per the current CIF Rotterdam methodology for North Sea grades, for transactions reported through the MOC process, Platts would reflect the delivery of pre-loaded oil, provided it meets all other Platts guidelines and the seller covers any reasonable additional costs incurred by the buyer.
TRADE TERMS: Counterparties in a trade reported during the MOC process are expected to perform basis typical bilateral trading and credit terms that have been applied and accepted by both counterparties in the open market.
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