Derivatives trading rises in North American regional crudes

As North American crude oil production surges, liquid financial markets are developing around grades such as Louisiana Light Sweet, Western Canadian Select, Mars and Midland, changing the behaviour of both physical hedgers and financial traders. Alexander Osipovich reports

In the past, North American energy companies looking to hedge their exposure to crude oil prices did not have a broad menu of instruments to choose from. By and large, they had two choices: West Texas Intermediate (WTI), the dominant benchmark for US domestic crude, based on prices at the storage hub of Cushing, Oklahoma, and North Sea Brent, the seaborne benchmark preferred internationally. Limited physical markets existed for other grades of crude oil, with various specifications and delivery