ICE CEO: ICE 'Will Be A Player' In Argus Sour Crude Market

By Jacob Bunge Of DOW JONES NEWSWIRES CHICAGO -(Dow Jones)- IntercontinentalExchange Inc. (ICE) will launch a crude oil futures contract based on a new U.S. pricing benchmark in the near future, an exchange executive said Tuesday. The move by ICE comes as Saudi Aramco, the world's largest oil exporter, announced last week that it will adopt a new oil pricing scheme developed by Argus Media, shifting away from the formula underlying crude oil futures traded on the New York Mercantile Exchange. Nymex parent CME Group Inc. (CME) said last week that it would launch its own futures contracts on the new benchmark, backed by Argus Media, by late January 2010. Other oil exporters, including Venezuela, are reportedly considering a shift to the Argus benchmark following the announcement from Saudi Aramco. ICE Chief Financial Officer Scott Hill told Dow Jones Newswires Tuesday that the Atlanta-based exchange operator secured a license to use the Argus index in advance of Aramco's shift to the new benchmark, and ICE has been developing listed futures products around it. "We view it as incremental to our existing volumes," Hill said, noting the potential for investors to speculate on spreads between an Argus-based future and the existing global benchmarks, WTI and Brent. ICE's Argus-linked products are slated to launch in the near future; Chief Executive Jeffrey Sprecher told investors on a conference call Tuesday that ICE "will be a player" in the developing Argus sour crude market. The switch by to the Argus benchmark is seen threatening the light, sweet crude futures contract traded on the Nymex, used by oil-consuming companies to lock in purchase prices in advance. That contract is tied to higher-quality oil delivered to Cushing, Okla., and could become less attractive to a refiner buying oil priced using the Argus index, which tracks prices for lower-quality, or sour, oil. The Argus index combines prices for three oil blends produced in the Gulf of Mexico, all sour crudes delivered at several points along the Gulf Coast. Argus Media says the Gulf Coast's web of pipelines and storage terminals let its benchmark more accurately reflect global oil supply conditions, whereas Cushing-based futures have been distorted by tight storage conditions at the delivery point. -By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com