SUBMISSION COVER SHEET

IMPORTANT: Check box if Confidential Treatment is requested 

Registered Entity Identifier Code (optional): 21-109

Organization: New York Mercantile Exchange, Inc. ("NYMEX")

Filing as a: DCM SEF DCO SDR 

Please note - only ONE choice allowed.

Filing Date (mm/dd/yy): 02/24/21 Filing Description: Increase of Spot Position Limits of

Eleven (11) Core Energy Futures and Related Contracts 

SPECIFY FILING TYPE 

Please note only ONE choice allowed per Submission.

Organization Rules and Rule Amendments

Certification § 40.6(a)

Approval § 40.5(a)

Notification § 40.6(d)

Advance Notice of SIDCO Rule Change § 40.10(a)

SIDCO Emergency Rule Change § 40.10(h)

Rule Numbers: See filing.

New Product Please note only ONE product per Submission.

Certification § 40.2(a)

Certification Security Futures § 41.23(a)

Certification Swap Class § 40.2(d)

Approval § 40.3(a)

Approval Security Futures § 41.23(b)

Novel Derivative Product Notification § 40.12(a)

Swap Submission § 39.5

Product Terms and Conditions (product related Rules and Rule Amendments)

Certification § 40.6(a) 

Certification Made Available to Trade Determination § 40.6(a)

Certification Security Futures § 41.24(a)

Delisting (No Open Interest) § 40.6(a) 

Approval § 40.5(a)

Approval Made Available to Trade Determination § 40.5(a)

Approval Security Futures § 41.24(c)

Approval Amendments to enumerated agricultural products § 40.4(a), § 40.5(a)

“Non-Material Agricultural Rule Change” § 40.4(b)(5)

Notification § 40.6(d)

Official Name(s) of Product(s) Affected: 

Rule Numbers:
300 Vesey Street New York, NY 10282 T 212 299 2200 F 212 301 4645 christopher.bowen@cmegroup.com cmegroup.com

Christopher Bowen 

Managing Director and Chief Regulatory Counsel

Legal Department

February 24, 2021

VIA ELECTRONIC PORTAL

Mr. Christopher J. Kirkpatrick

Office of the Secretariat

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, N.W.

Washington, D.C. 20581

Re: CFTC Regulation 40.6(a) Certification. Increase of Spot Position Limits for Eleven (11)

Core Energy Futures and Related Contracts.

NYMEX Submission No. 21-109

Dear Mr. Kirkpatrick:

Pursuant to Commodity Futures Trading Commission (“CFTC” or “Commission) Regulation 40.6(a), New 

York Mercantile Exchange, Inc. (“NYMEX” or “Exchange”) is certifying an increase to the spot month 

position limits of eleven (11) core energy futures contracts in Exhibit 1. below and their related contracts as 

more specifically described in Appendix A attached, (collectively, the “Contracts”) commencing with the 

April 2021 contract month and beyond (collectively, the “Rule Amendments”) effective concurrent with the 

March 15, 2021 effective date for the CFTC’s final rule on Position Limits for Derivatives (“Final Rule”). 

NYMEX notes that the 11 core energy futures contracts set forth in Exhibit 1. are core referenced futures 

contracts as that term is defined in the CFTC’s final rule on Position Limits for Derivatives. 

In a separate but related matter and in a further effort to comply with the CFTC’s Final Rule, NYMEX is 

requesting review and approval of amendments to NYMEX Rules 559. (“Position Limits and Exemptions”) 

and 562. (“Position Limit Violations”) (See NYMEX Submission No. 21-069 dated January 27, 2021.)

Exhibit 1.

Contract Title

Commodity

Code

Rulebook

Chapter

Current Spot 

Month Position 

Limits up to 

and including 

March 2021

Contract Month

Increased Spot 

Month Position 

Limits Commencing 

with April 2021

Contract Month and 

Beyond

Light Sweet Crude Oil Futures CL 200 3,000 6,000/5,000/4000

Crude Oil Bullet Futures WS 691 3,000 6,000/5,000/4000

Crude Oil Last Day Financial 

Futures 26 828 3,000 6,000/5,000/4000

Henry Hub Natural Gas 

Futures NG 220 1,000 2,000

Henry Hub Natural Gas LookAlike Last Day Financial 

Futures

HH 823 1,000 2,000

NY Harbor ULSD Futures HO 150 1,000 2,000

NY Harbor ULSD Last Day 

Financial Futures 23 829 1,000 2,000

NY Harbor ULSD Bullet 

Futures BH 825 1,000 2,000

1
300 Vesey Street New York, NY 10282 T 212 299 2200 F 212 301 4645 christopher.bowen@cmegroup.com cmegroup.com

RBOB Gasoline Futures RB 191 1,000 2,000

RBOB Gasoline Last Day 

Financial Futures 27 830 1,000 2,000

RBOB Gasoline Bullet Futures RT 555 1,000 2,000

As a result of the increase of to the spot month position limits for the Contracts, the Exchange is also 

amending the spot month position limits for certain futures and option contracts which aggregate into the 

Contracts for position limit purposes. A comprehensive list of all impacted contracts can be found in 

Appendix A, which is attached under separate cover. 

The Position Limit, Position Accountability and Reportable Level Table and Header Notes located in the 

Interpretations and Special Notices Section of Chapter 5 of the NYMEX Rulebook (the “Table”) will be 

amended to reflect aforementioned changes. Appendix A provided under separate cover, provides the 

Table with additions underscored and deletions struck through. 

NYMEX is also providing an updated analysis of deliverable supply in connection with the increased position 

limits for the Light Sweet Crude Oil Futures, Henry Hub Natural Gas Futures, NY Harbor ULSD Futures, 

and RBOB Gasoline Futures contracts (see Appendix B, C, D, and E, respectively, provided under separate 

cover).

The Exchange reviewed the designated contract market core principles (“Core Principles”) as set forth in 

the Commodity Exchange Act (“Act”) and identified that Rule Amendments may have some bearing on the 

following Core Principles.

• Contracts Not Readily Subject to Manipulation: The Contracts are not readily subject 

to manipulation due to the deep liquidity and robustness in the underlying physical markets.

• Position Limitations or Accountability: The speculative position limits for the Contracts 

as demonstrated in this submission are consistent with the Commission’s guidance.

• Availability of General Information: The information contained herein will be 

disseminated to the marketplace via Market Surveillance Notice. The Exchange will publish 

information on the Contracts’ specifications on its website, together with daily trading 

volume, open interest, and price information.

Pursuant to Section 5c(c) of the Act and CFTC Regulation 40.6(a), the Exchange hereby certifies that the

Rule Amendments comply with the Act, including regulations under the Act. There were no substantive 

opposing views to this proposal.

The Exchange certifies that this submission has been concurrently posted on the Exchange’s website at: 

http://www.cmegroup.com/market-regulation/rule-filings.html.

2
300 Vesey Street New York, NY 10282 T 212 299 2200 F 212 301 4645 christopher.bowen@cmegroup.com cmegroup.com

If you require any addition information regarding this submission, please contact the undersigned at (212) 

299-2200 or via e-mail at CMEGSubmisisonInquiry@cmegroup.com.

Sincerely, 

/s/Christopher Bowen

Managing Director and Chief Regulatory Counsel

Attachments: Appendix A - Position Limit, Position Accountability, and Reportable Level Table in Chapter

 5 of the NYMEX Rulebook (attached under separate cover)

 Appendix B - Analysis of Deliverable Supply – Light Sweet Crude Oil Futures

 Appendix C - Analysis of Deliverable Supply – Henry Hub Natural Gas Futures

 Appendix D - Analysis of Deliverable Supply – NY Harbor ULSD Futures

 Appendix E - Analysis of Deliverable Supply – RBOB Gasoline Futures 

3
Appendix A

NYMEX Rulebook

Chapter 5

(“Trading Qualifications and Practices”)

Position Limit, Position Accountability, and Reportable Level Table 

(attached under separate cover)

4
Appendix B

Analysis of Deliverable Supply – Light Sweet Crude Oil Futures 

In estimating deliverable supply for the Light Sweet Crude Oil Futures, the New York Mercantile Exchange, Inc. 

(“NYMEX” or “Exchange”) relied on long-standing precedent, which provides that the key component in estimating 

deliverable supply is the portion of typical production and supply stocks that could reasonably be considered to be readily 

available for delivery.

Appendix C to part 38 of the Commodity Futures Trading Commission’s regulations defines deliverable supply as “the 

quantity of the commodity meeting the contract’s delivery specifications that can reasonably be expected to be readily 

available to short traders and saleable by long traders at its market value in normal cash marketing channels at the 

derivative contract’s delivery points during the specified delivery period, barring abnormal movement in interstate 

commerce.”

I. Methodology and Data Sources

The Exchange considered three components in evaluating deliverable supply estimates of the Domestic Light Sweet

Common Stream Crude Oil for the Cushing, Oklahoma delivery location of the Light Sweet Crude Oil Futures contract: 

(1) Crude Oil Production; 

(2) Crude Oil Flows to the delivery area; and 

(3) Crude Oil Storage in the delivery area. 

A. Crude Oil Production

While crude oil production information is, in part, available from other sources, particularly at the state level from energy 

or tax revenue authorities, the Exchange determined to use production information collected by the U.S. Department of 

Energy (“DOE”) Energy Information Administration (“EIA”). Specifically, the Exchange has chosen to rely on the EIA 

production data because it constitutes a single source, employing common standards, across all states. The EIA data 

are highly regarded but they do not provide sufficient breakdown on the quality characteristics of the oil production to 

determine the subset of total production that would qualify as Domestic Light Sweet under the terms of the futures 

contract.

B. Crude Oil Flows to the Cushing Delivery Area

To determine the flows of Domestic Light Sweet crude oil into the delivery area, NYMEX consulted with industry 

executives and professionals from pipeline and storage terminal operators in Cushing as well as other major industry 

participants. It is noteworthy that the estimates provided here are materially less than the production that can readily 

access the delivery mechanism and which could be delivered due to the fact that the sources we used were specifically 

knowledgeable about actual Cushing deliveries. Thus, the information provided is not what could be delivered — the 

standard which is in accordance with Commission’s policy and precedent — but what actually is delivered. The 

Exchange believes that the Cushing delivery mechanism for light sweet crude oil and corresponding commercial 

secondary market constitutes such a sophisticated and highly-developed commercial market mechanism that, at any 

time, the actual flows to and stocks in the delivery area represent precisely the deliverable supply sufficient to support 

the mechanism. In other words, even though at any time there is additional production that could be delivered to the 

delivery mechanism, we are only including what actually flows in our estimate of deliverable supply.

C. Crude Oil Storage in the Cushing Delivery Area

Storage data are provided on a weekly basis by EIA. Details are provided for the U.S. Petroleum Administration for 

Defense Districts (“PADDs”) and Cushing. There are five PADDs and, in some cases, they correspond to broad regions. 

PADD 2 broadly includes the Midwest; PADD 3 broadly includes U.S. Gulf Coast states and New Mexico; PADD 4 

contains the Rocky Mountain States excluding New Mexico. Cushing is the only single location where crude oil official 

5
inventory numbers are collected and publicly disseminated on a regular basis anywhere in the world. The actual 

geographic market that is consistently most applicable to the NYMEX crude oil futures contract would, therefore, include 

much of PADD 2, not just Cushing. 

Nonetheless, NYMEX includes only inventories reported at Cushing, so these underestimate relevant storage. As with 

production, EIA does not provide details on the quality characteristics of stored crude oil, but the industry experts with 

whom NYMEX consulted consistently estimated that 60% to 70% of the crude oil stored at Cushing qualified as Domestic 

Light Sweet Common Stream (to be conservative, the Exchange will discount 40% of inventory in its calculation of 

deliverable supply estimates).

II. The Cushing Physical Delivery Mechanism: Scope of Deliverable Crude Oil

The Cushing physical delivery mechanism is comprised of a network of nearly two dozen pipelines and 12 storage 

terminals, with extensive inter-connectivity. Two of the storage facilities — Enterprise and Enbridge — and their pipeline 

manifolds are the core of the Cushing physical delivery mechanism.1 Physical volumes delivered against the Light 

Sweet Crude Oil Futures contract within the Enterprise and Enbridge systems are at par value. Any deliveries made on 

futures contracts elsewhere in Cushing require the seller to compensate the buyer for the lower of the transportation 

netbacks from these facilities to where the delivery occurs. Detailed information about the inflowing and outflowing 

pipelines is contained below in Table 2.

Terminating obligations in the Light Sweet Crude Oil Futures contract are fulfilled by delivering WTI type light sweet 

crude oil designated as “Domestic Common Stream” by Enterprise Products LLC. Market participants commonly refer 

to the light sweet deliverable streams as “WTI.” In addition, the Domestic Common Stream includes a fungible blend of 

light sweet streams produced in the U.S. shale oil areas, including the Bakken, Niobrara, and Permian producing areas. 

Furthermore, each of these light sweet crude oil streams is fungibly blended and included as part of the “Domestic 

Common Stream” within the complex that comprises the Cushing delivery mechanism, as well as in the WTI physical 

market which calls for delivery in the Cushing delivery mechanism.

III. Physical Market Trading Structure and Term Contracts

A. Physical Market Trading Structure

Typically, there is a chronology of sales and purchases of crude oil in the onshore U.S. market that starts with a sale 

from producer and finishes with a purchase by an end-user to consume the crude oil. First-sales are from producers to 

aggregators or other middleman-type firms with delivery at the property where it is produced. The first-sale buyer 

transports oil downstream from the point of sale. Usually the first-sale buyer resells the oil to someone other than the 

end-user but sometimes sells directly to the end-user. 

Final sales are sales to end-users who when they consume the oil remove it from the supply chain. End-users, however, 

also resell oil. Such end-user re-sales sometimes occur during the same commercial cycle in which they purchased it; 

other times, they occur during a later commercial cycle after the oil has been stored for a period of time. Like end-users, 

other buyers of oil also can either resell it immediately or store it first for some period of time and then resell it later. 

Thus, it is a common commercial practice that the first-sale and multiple subsequent re-sales occur in the same delivery 

cycle. 

As discussed above, the Cushing delivery market is essentially a major reseller market where buyers either: resell the 

oil to someone else; store the oil and resell it later; store the oil and then consume it later; or transport it to consume it. 

The Cushing market is essentially downstream of first-sales. Most of the sales in the Cushing market are for resale and 

not for either storage or final-sale; in fact, the physical market in “WTI,” in which the standard form of delivery is within 

the pipeline system at Cushing, is estimated to be 10-20 times the multiple of “WTI” oil that flows to Cushing. As such, 

it is clear that most sales are for resale because they constitute the selling, over-and-over (thus, re-selling), of the base 

1 Three of the major sources for the cash-market information provided herein are Plains All America, Enterprise and Enbridge. Enterprise oversees 

the vast majority of deliveries in the Cushing Delivery Market and, as indicated, Enterprise and Enbridge are the core delivery mechanism operators. 

Plains and Enbridge account for about 60% of the storage available at Cushing. 

6
physical oil that flows to Cushing. Argus Media documents about 5-8 times the flow in “WTI” sales but does not capture 

all of the sales.2

B. Term Contracts

The Exchange has spoken with and interviewed a number of market participants regarding common commercial 

practices with respect to the use of term contracts in the U.S. onshore crude oil market.3 The responses we received 

were consistent and they can be summarized as follows:

• Almost all first-sales of production are sold term; as discussed in the previous section, typically for delivery on 

the property where it is produced (or nearest gathering pipeline or holding tank), and typically to middlemanfirms or aggregators. These middleman-firms typically resell the crude oil to other middleman-firms (or 

participants performing that function) or to end-users. Typically, the first-sales contracts are “evergreen” 

contracts that can be discontinued by either party with notice. NYMEX is including evergreen contracts in the

“term contracts” category.

• There are no restrictions applied to the resale of crude oil bought first-sale on a term basis from producers. In 

fact, that would clearly not be applicable because sales are typically to aggregators or others acting in a 

middleman-firm role with the expressed responsibility of reselling the oil.

• The Cushing market is downstream of first-sales; in other words, Cushing is downstream of any term sales from 

producers. Thus, even if barrels were sold term by the producer, in the Cushing market those barrels are resold and re-delivered by either the purchaser from the producer or a subsequent purchaser from that original 

purchaser. The Cushing market mechanism, which consists of trading and physical delivery of light sweet crude 

oil, is a commercial secondary (or spot) market which is extremely liquid, comprised of broad participation and 

results in a substantial quantity of physical delivery of crude oil.

• Some end-user refiners in the Cushing market purchase specific light sweet crude oil streams, such as Bakken 

or Niobrara Light Sweet crude oil, on a term basis, and these refiners tend to segregate a portion of the specific 

light sweet crude streams for processing at their refineries. Based on conversations with refiners in the Cushing 

market, the Exchange estimates that approximately 10% of the deliverable supply for Cushing is segregated 

and designated for use by end-user refiners, and therefore is not available for re-sale in the Cushing market. 

Consequently, the Exchange will reduce its estimate of deliverable supply in Cushing by 10% to account for the 

specific light sweet streams that are designated for processing and segregated by the end-user refiners.

• Our sources expressly advised us that any production sold long-term was available for potential re-sale, such 

as during periods of refinery maintenance, and this is especially the case in the Cushing market.

C. Crude Oil Production

The production area that supplies crude oil to Cushing via pipeline and rail is comprised of the following eight (8) states: 

North Dakota, Montana, Wyoming, Colorado, New Mexico, Onshore Texas, Oklahoma, and Kansas.

In the three-year period of December 2017 through November 2020, the average production of crude oil available in the 

eight states was approximately 8.3 million barrels per day. Based on discussions with industry participants, our estimate 

of the portion of that average production which would qualify as Domestic Light Sweet Common Stream is 50% or

higher— i.e., approximately 4.15 million barrels per day. The 4.15 million barrels per day of crude oil production is 

equivalent to approximately 124.75 million barrels per month, or 124,750 futures contracts equivalents (contract size: 

1,000 barrels).

2 The commercial market for physical delivery of light sweet crude oil in Cushing is a secondary (or spot) market mechanism. The 

number of physical deliveries in this market each month is 240 million barrels or higher (240,000 futures contracts equivalent or 

higher).

3 These include: Plains All America, a major Midcontinent aggregator and marketer and operator of pipeline and storage terminals 

including in Cushing; and an Energy Market Participant Group of several dozen market participants organized through Hunton & 

Williams LLP to discuss and comment on Regulatory issues.

7
Table 1 below provides annual production data available for production in the eight states that supply the Cushing crude 

oil market for the period of December 2017 through November 2020. The data show that production peaked in 2019, 

and then declined in 2020. As indicated above, the Exchange has determined to not utilize production data in its 

deliverable supply estimate, but the data demonstrates that production levels are more than sufficient to support the 

actual flows of deliverable product to the delivery location.

D. Crude Oil Flows to the Cushing Delivery Area

Currently, there is approximately 4.1 million b/d of inflow pipeline capacity to Cushing and 3.2 million barrels per day of 

outflow capacity. In addition, according to the EIA, there are 91.2 million barrels of storage capacity in the Cushing area 

which continues to grow steadily.

The Exchange collects inbound Cushing crude oil flows periodically but not on an on-going or scheduled basis as such 

information is proprietary and non-public. Based on information provided by industry sources in Table 2 below, as of 

December 2020, actual flows of crude oil to Cushing have ranged from 2.3 million to 2.6 million barrels per day, with 

Domestic Light Sweet Common Stream Crude Oil averaging between 1.3 to 1.5 million barrels per day.

4

 On a 30-day 

monthly basis, actual flows of Domestic Light Sweet Common Stream Crude Oil ranged from 39 to 46.5 million barrels

per month, or 39,000 to 46,500 Light Sweet Crude Oil futures contract equivalents. 

As of July 2018, actual flows of crude oil in-bound to Cushing have ranged from 2.2 million to 2.5 million barrels per 

day as shown in Table 3 below, with Domestic Light Sweet Common Stream Crude Oil averaging between 1.270 to 

1.450 million barrels per day.

5

 On a 30-day monthly basis, actual flows of Domestic Light Sweet Common Stream 

Crude Oil ranged from 38.0 to 43.5 million barrels per month, or 38,000 to 43,500 Light Sweet Crude Oil futures 

contract equivalents. 

As of March 2015, estimated in-bound flows of Domestic Light Sweet Common Stream Crude Oil into Cushing 

averaged between 920,000 and 1,000,000 barrels per day as illustrated in Table 4 below. On a 30-day monthly basis, 

actual flows of Domestic Light Sweet Common Stream Crude Oil were 27.6 million to 30.0 million barrels per month or 

27,600 to 30,000 Light Sweet Crude Oil futures contract equivalents. 

Given that the Exchange only collects pipeline flow data on a periodic basis, the Exchange is unable to provide a 

three-year average of Domestic Light Sweet Common Stream Crude Oil flows into Cushing. As such, the Exchange 

determined to average the 2015, 2018 and 2020 estimated flows data collected. The average of the ranges for 2015, 

2018 and 2020 for Domestic Light Sweet Common Stream Crude Oil flows into Cushing are 35,000 to 40,000 contract 

equivalents. The midpoint of the average of the ranges is approximately 37,500 contract equivalents. 

E. Crude Oil Storage in the Cushing Delivery Area

As of May 2020, EIA reported that shell storage capacity at Cushing was 91.2 million barrels and working storage 

capacity was 75.8 million barrels.6 Currently, there is substantial excess working capacity at Cushing (nearly 28 million 

barrels). Finally, it should be noted that, at least on a temporary basis, storage can exceed working capacity and it is 

common for an individual tank to reach 85-90% of shell capacity (which exceeds the 83% average underlying the EIA 

estimates).

Table 5 below provides monthly averages of weekly Cushing stocks for the period beginning January 2018 through 

December 2020 as published by the EIA. For the three-year average from January 2018 through December 2020, 

inventories averaged 42.6 million barrels and ranged from about 23 million to 60 million barrels. NYMEX asked operators 

of storage in Cushing if they would share specific data on quantities of Domestic Light Sweet Common Stream Crude 

Oil stored at their facilities and they responded that such data were confidential. As discussed above, the Exchange 

estimated that approximately 60% of the total oil stored at Cushing qualified as Domestic Light Sweet Common Stream

Crude Oil. Based on the foregoing, for the January 2018 – December 2020 period, the monthly average Domestic Light 

4 The sources were various pipeline operators and other industry sources.

5 The sources were: Plains All America, an aggregator and marketer of crude oil production and pipeline and storage terminal operator at Cushing; 

and other industry sources.

6 http://www.eia.gov/petroleum/storagecapacity/table2.pdf Shell capacity is defined by EIA as the design capacity of a petroleum storage tank which 

is always greater than or equal to working storage capacity. 

8
Sweet Common Stream Crude Oil stored at Cushing was approximately 25.5 million barrels or 25,500 futures contract 

equivalents. 

The Exchange has further evaluated both operational practices at storage facilities as well as commercial practices by 

customers of storage facilities to determine if some components of inventoried product could rightfully be considered 

not to be readily deliverable. 

With respect to operational practices, based on discussions with some industry experts, the Exchange conservatively 

estimates that 6.75% of stored product, on average, is required for operational minimums.7 This converts into 

discounting an estimated 1.7 million barrels of Domestic Light Sweet crude oil based on the three-year average storage

level (or 1,700 contract equivalents). In applying a discount of 6.75% to account for operational minimums, average 

monthly Domestic Light Sweet Common Stream Crude Oil for the January 2018 – December 2020 period is further 

reduced to approximately 23,800 contract equivalents. 

With respect to commercial practices, the Exchange specifically sought whether storage customers were expressly 

allotting any stored barrels at Cushing for refining that were, therefore, unavailable for secondary market delivery. We 

consistently heard from market participants that was not the case; that barrels stored at Cushing are not specifically 

targeted for scheduled refining. Rather, refiners typically store barrels targeted for scheduled refining in tanks on the 

premises at their respective refineries or at other storage facilities. However, we did hear from one refiner that they 

keep barrels stored at Cushing for the contingency that there could be some unexpected interruption in their refinery 

supply; and, rather than refine the barrels stored at Cushing, they use them to trade for other barrels they would refine. 

Thus, the Exchange determined to further reduce the average monthly Domestic Light Sweet Common Stream crude 

oil stored at Cushing to account for this contingency storage in our estimate of deliverable supply. We estimate this 

quantity to be 2 million barrels (or 2,000 contract equivalents) of Domestic Light Sweet crude oil. Therefore, for the

January 2018 – December 2020 period, the Exchange estimates stored product at Cushing (adjusted for quality 

specifications, operational minimums and contingency storage) and which is readily available for delivery against the 

Light Sweet Crude Oil futures contract to be approximately 21,800 contract equivalents. 

Based on the above analysis, the Exchange determined at this time to base its estimates of deliverable supply on the 

sum of:

• Storage: 21,800 contract equivalents (which represents the average monthly inventory for the January 2018 –

December 2020 period adjusted to account for quality specifications, operational minimums and contingency 

storage); and

• Inflow: 37,500 contract equivalents (which represents the midpoint of the average of the ranges of the 2015, 

2018 and 2020 Domestic Light Sweet Common Stream Crude Oil flows into Cushing). 

The total estimated deliverable supply, consisting of storage and pipeline inflows, was 59,300 contract equivalents. 

Additionally, and as noted in the above analysis, the Exchange shall apply a 10% reduction to the sum of inventory

storage and inflows into Cushing in order to discount segregated barrels that may be designated for processing by enduser refiners and typically not available for re-sale in the Cushing market. Therefore, after applying the 10% reduction, 

the Exchange has determined the estimated deliverable supply available for delivery against the Light Sweet Crude Oil 

Futures contract at approximately 53,370 futures contract equivalents per month. 

The proposed spot month limits for the Light Sweet Crude Oil Futures contract utilize a tiered structure of 

6,000/5,000/4,000 contracts for the final three days of trading in the expiring contract month. Based on the foregoing 

analysis, the proposed spot month position limit of 6,000 contracts represents 11.2% of the estimated monthly 

deliverable supply. Further, the proposed spot month position limit of 5,000 contracts represents 9.4% of the estimated 

monthly deliverable supply. Finally, the proposed spot month position limit of 4,000 contracts represents 7.5% of the 

total estimated monthly deliverable supply.

Table 1

7 The Exchange has been advised that, for older tanks, the operational minimum is 9% and, for newer tanks, it is 4.5%. The Exchange’s 

assessment is that the majority of tanks at Cushing would qualify as newer. Nonetheless, to be conservative, we have applied the mid-point 

percentage—6.75%-- for all of Cushing.

9
U.S. Crude Oil Production8

For Eight States that Supply Cushing, Oklahoma

(in Thousands of Barrels per Day)

Annual Averages based 

on Monthly EIA Data

Crude Oil Production

(Thousands of Barrels

per Day)

Dec 2017 to Nov 2018 7,601

Dec 2018 to Nov 2019 8,809

Dec 2019 to Nov 2020 

(Jan-Nov.)

8,543

Three-Year Average 8,318

Table 2 

Crude Oil Flows to Cushing (as of December 2020)

(Barrels/Day)9

Incoming Pipelines Capacity Owner Estimated Flows (in Barrels/Day)

Keystone XL (from Steele City, NE) 760,000 Transcanada 400,000 – 450,000 BD (100% Heavy Sour)

Basin Pipeline (Permian) 550,000 Plains All American 250,000 – 325,000 (90% WTI, 10% Sour)

Centurion North Pipeline (Permian) 170,000 Occidental 40,000 – 50,000 (100% WTI)

Spearhead Pipeline (Canada) 195,000 Enbridge 180,000 – 195,000 (100% Heavy Sour)

Flanagan South (Canada/Bakken) 600,000 Enbridge 450,000 – 500,000 (10% WTI, 90% Heavy Sour)

White Cliffs Pipeline (Niobrara) 90,000 Rose Rock 85,000 – 90,000 (100% WTI)

Cashion, OK Pipeline 250,000 Plains All American 120,000 – 130,000 (100% WTI)

Mississippian Lime Pipeline 150,000 Plains All American 70,000 – 80,000 (100% WTI)

Pony Express Pipeline (Niobrara) 400,000 Tallgrass 350,000 – 375,000 (100% WTI)

Saddlehorn/Grand Mesa 450,000 Magellan/Plains 225,000 – 300,000 (100% WTI)

Glass Mountain 210,000 Navigator 50,000 – 60,000 (100% WTI)

Hawthorn (Stroud to Cushing) 90,000 Hawthorn 25,000 – 30,000 (100% WTI)

SCOOP Pipeline 70,000 Magellan 45,000 – 50,000 (100% WTI)

Great Salt Plains 35,000 Parnon 25,000 – 30,000 (100% WTI)

Eagle North 25,000 Blueknight 4,000 – 7,000 (100% WTI)

Red River 35,000 Plains All American 1,000 – 5,000 (100% WTI)

TOTAL In-Bound Capacity 4.1 Million Capacity WTI Flow: 1,310,000 – 1,550,000 B/D

Outgoing Pipelines Capacity (B/D) Owner

Seaway Pipeline 950,000 Enterprise

Keystone MarketLink 750,000 Transcanada

BP#1 (to Chicago) 180,000 BP

Ozark (to Wood River, IL) 360,000 Enbridge

Osage (to Eldorado, KS) 165,000 Magellan/NCRA 

Coffeyville CVR pipeline 110,000 CVR Energy

Phillips (to Ponca City, OK) 122,000 ConocoPhillips

Phillips (to Borger, TX) 59,000 NuStar

Plains Red River (to Longview) 235,000 Plains All American

Diamond Pipeline (to Memphis) 200,000 Plains All American

Sunoco (twin lines to Tulsa) 70,000 Sunoco

Magellan Tulsa 30,000 Magellan

TOTAL Out-bound Capacity 3.2 Million B/D

Table 3

Crude Oil Flows to Cushing (as of July 2018)

8 The production listed here includes North Dakota, Montana, Wyoming, Colorado, New Mexico, Onshore Texas, Oklahoma, and Kansas. The web 

link is: http://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbblpd_a.htm

9 Sources: pipeline operators and other industry sources. 

10
(Barrels/Day)10

Incoming Pipelines Capacity Owner Estimated Flows (in Barrels/Day)

Keystone XL (from Steele City, NE) 590,000 Transcanada 350,000 - 400,000 BD (100% Heavy Sour)

Basin Pipeline (Permian) 450,000 Plains 350,000 - 400,000 (80% WTI, 20% Sour)

Centurion North Pipeline (Permian) 170,000 Occidental 120,000 - 140,000 (100% WTI)

Spearhead Pipeline (Canada) 195,000 Enbridge 150,000 - 175,000 (100% Heavy Sour)

Flanagan South (Canada/Bakken) 600,000 Enbridge 400,000 - 450,000 (10% WTI, 90% Heavy Sour)

White Cliffs Pipeline (Niobrara) 215,000 Rose Rock 100,000 - 120,000 (100% WTI)

Plains Cashion, OK Pipeline 250,000 Plains 120,000 -145,000 (100% WTI)

Mississippian Lime Pipeline 150,000 Plains 95,000 - 100,000 (100% WTI)

Pony Express Pipeline (Niobrara) 325,000 Tallgrass 300,000 – 325,000 (100% WTI)

Saddlehorn-Grand Mesa 340,000 Magellan/Plains 140,000 – 150,000 (100% WTI)

Glass Mountain 210,000 Sem Group 30,000 – 40,000 (100% WTI)

Hawthorn (Stroud to Cushing) 90,000 Hawthorn 10,000 – 20,000 (100% WTI)

Great Salt Plains 35,000 Parnon 30,000 – 35,000 (100% WTI)

Eagle North 20,000 Blueknight 5,000 – 10,000 (100% WTI)

TOTAL In-Bound Capacity 3.6 Million Capacity WTI Flow: 1,270,000 – 1,450,000 B/D

Outgoing Pipelines Capacity (B/D) Owner

Seaway Pipeline 850,000 Enterprise

Keystone MarketLink 700,000 Transcanada

BP#1 (to Chicago) 180,000 BP

Ozark (to Wood River, IL) 345,000 Enbridge

Osage (to Eldorado, KS) 165,000 Magellan/NCRA 

Coffeyville CVR pipeline 110,000 CVR Energy

Phillips (to Ponca City, OK) 122,000 ConocoPhillips

Phillips (to Borger, TX) 59,000 NuStar

Plains Red River Pipeline (to Longview) 125,000 Plains All American

Plains Red River Pipeline 25,000 Plains All American

Sunoco (twin lines to Tulsa) 70,000 Sunoco

Plains Cherokee 20,000 Plains All American

Magellan Tulsa 30,000 Magellan

Diamond Pipeline (to Memphis) 200,000 Plains

TOTAL Out-bound Capacity 3.0 Million B/D

10 Sources: Plains All American Pipeline Company, and other industry sources. 

11
Table 4

Crude Oil Flows to Cushing (as of March 2015)

(Barrels/Day)11

Incoming Pipelines Capacity Owner Estimated Flows (in Barrels/Day)

Keystone XL (from Steele City, NE) 575,000 Transcanada 200,000 - 250,000 BD (Heavy sour) 

Basin Pipeline (Permian) 450,000 Plains 250,000 (80% WTI)

Centurion North Pipeline (Permian) 120,000 Occidental 95,000 - 100,000 (100% WTI)

Spearhead Pipeline (Canada) 210,000 Enbridge 150,000 - 175,000 (Canadian sour)

Flanagan South (Canada/Bakken) 585,000 Enbridge 400,000 - 450,000 (10% WTI, 90% Sour)

White Cliffs Pipeline (Niobrara) 150,000 Rose Rock 100,000 - 120,000 (100% WTI)

Plains Cashion, OK Pipeline 100,000 Plains 80,000 (100% WTI)

Mississippi Lime Pipeline 175,000 Plains 110,000 (100% WTI)

Pony Express Pipeline (Niobrara) 320,000 Tallgrass 180,000 – 200,000 (100% WTI)

Hawthorn (Stroud to Cushing) 90,000 Hawthorn 20,000 – 25,000 (100% WTI)

Great Salt Plains 30,000 JP Energy 15,000 – 20,000 (100% WTI)

Northern Cimarron 30,000 Rose Rock 15,000 – 20,000 (100% WTI)

Midcontinent Pipeline 30,000 Sunoco Logistics 25,000 – 30,000 (100% WTI)

Glass Mountain Pipeline 140,000 Rose Rock 40,000 – 50,000 (100% WTI)

TOTAL In-Bound Capacity 3.0 Million Capacity WTI Flow: 920,000 – 1,000,000 B/D

Table 5

Cushing Storage12

Average of Weekly Stocks

(in Thousand Barrels)

Year Month Stock

2018

Jan 41,309

Feb 31,941

Mar 30,448

Apr 35,519

May 36,509

Jun 31,754

Jul 24,175

Aug 23,714

Sep 23,301

Oct 29,339

Nov 35,977

Dec 40,779

2019

Jan 41,574

Feb 43,977

Mar 46,961

Apr 45,133

May 48,553

Jun 52,712

Jul 50,567

Aug 43,000

Sep 39,921

Oct 43,780

Nov 45,286

11 Sources: Plains All American Pipeline Company, JSK consulting, and other industry sources. 

12 http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W_EPC0_SAX_YCUOK_MBBL&f=W

12
De

c 38,672

2020

Jan35,715

Feb 38,237

Mar 39,614

Apr56,831

May 57,986

Jun 46,927

Jul 50,002

Aug52,722

Sep 54,744

Oct 59,464

Nov60,373

Dec58,353

Three-Year Avg. 42,640

13
Appendix C

Analysis of Deliverable Supply – Henry Hub Natural Gas Futures 

In estimating deliverable supply for the Henry Hub Natural Gas Futures, the New York Mercantile Exchange, 

Inc. (“NYMEX” or “Exchange”) relied on long-standing precedent, which provides that the key component

in estimating deliverable supply is the portion of typical production and supply stocks that could reasonably 

be considered to be readily available for delivery.

Appendix C to part 38 of the Commodity Futures Trading Commission’s regulations defines deliverable 

supply as “the quantity of the commodity meeting the contract’s delivery specifications that can reasonably 

be expected to be readily available to short traders and saleable by long traders at its market value in 

normal cash marketing channels at the derivative contract’s delivery points during the specified delivery 

period, barring abnormal movement in interstate commerce.”

I. Methodology and Data Sources

The Exchange considered four factors in evaluating the Henry Hub natural gas deliverable supply 

estimates:

(1) Geographic extent of the market;

(2) Natural gas production that can flow to the delivery location;

(3) Delivery capacity of the delivery mechanism; and

(4) Storage information.

A. Geographic Extent of the Market

The geographic extent of the market defines both the sources from which supplies can be readily provided 

as well as the destinations into which supply can be re-delivered. The Henry Hub delivery mechanism is 

part of a broader geographic market that encompasses U.S. Gulf Coast (USGC) area production, sales and 

re-sales. This includes production from Texas, Louisiana, Mississippi and Alabama, USGC area storage 

and USGC area pipelines and supporting facilities.

B. Natural Gas Production

To determine production estimates, NYMEX reviewed information gathered from two sources: Bentek, a 

wholly-owned subsidiary of Platts and the U.S. Department of Energy (“DOE”) Energy Information 

Administration (“EIA”).

Bentek is an industry leader in the provision of data aggregation and collation from the Interstate Natural 

Gas Pipelines’ electronic bulletin boards.2 Interstate natural gas pipelines are subject to Federal Energy 

Regulatory Commission (“FERC”) oversight and jurisdiction. As part of its regulatory oversight, FERC

1 http://www.ecfr.gov/cgi-bin/text-idx?SID=74959c3dbae469e2efe0a42b45b8dfae&mc=true&node=ap17.1.38_11201.c&rgn=div9

2 Bentek collects details on the flow of interstate pipeline natural gas from the production source, commonly known as the wellhead, 

to the local distribution company’s (including municipal operated distributors) delivery point, commonly known as its city-gate, beyond 

which point the pipeline ceases to be a federally regulated interstate pipeline.

14
requires interstate pipelines to operate publicly accessible electronic bulletin boards which provide 

information on scheduling, available capacity and natural gas flows on a near real-time basis. Among other 

things, Bentek collects and disseminates collated data from these electronic bulletin boards daily. Given 

this, the Bentek data presented can be more current than the EIA data, which are typically subject to a 

minimum two-month delay in publication.

EIA data are a definitive source for production information and EIA does provide marketed production data 

for Federal U.S. Gulf Coast offshore production as well as onshore production for individual states such as 

Louisiana and Texas; these data include, however, some onshore production that would not be able to 

readily access the delivery point.

Bentek provides greater geographic detail than the EIA data by providing both U.S. Gulf Coast offshore and 

onshore natural gas production that has ready access to the delivery point. As is discussed below, NYMEX 

believes that the Bentek data underestimates the total production with ready access to the Henry Hub but, 

nonetheless, represents a reasonable basis for production estimates.

C. Henry Hub Operating Capacity

The source of the Henry Hub pipeline receipt and delivery capacity is the Sabine Pipe Line Co. website. As 

part of FERC regulation, interstate pipelines are required to provide daily capacity information that includes 

receipt and delivery design, scheduled and available for all certificated interconnections.3 The inflowing 

natural gas daily receipts operating capacity is 3,385,000 Dth which is equivalent to 3,385,000 MMBtu. The

outflowing natural gas daily deliveries operating capacity is 3,165,000 Dth which is equivalent to 3,165,000 

MMBtu.

D. State of Louisiana and Producing Area Natural Gas Storage

Storage data are provided on a weekly basis by EIA and are approximately four business days old upon 

release. These data are provided by general region—East, West and Producing. Producing includes the

U.S. Gulf Coast region which includes the delivery location for the Henry Hub Natural Gas Futures contract. 

The EIA also collects data at the individual state level but provides this data with a time lag of approximately 

six months. At these frequencies of release, there is no official storage data with greater geographic detail 

than either the Producing region or state level.

II. The Henry Hub Physical Delivery Mechanism

The Henry Hub consists of interconnections with 11 interstate and intrastate pipelines and related 

infrastructure. The Henry Hub is owned and operated by EnLink Midstream. The deliveries pipelines source 

their natural gas from the U.S. Gulf Coast region, both onshore and offshore, which extends from Texas to 

Alabama. Henry Hub has two compressor stations that enable natural gas to move from lower pressure

pipeline Henry Hub receipt interconnections to higher pressure downstream Henry Hub pipelines.

Henry Hub also offers an intra-Hub tracking and transfer service, a form of in-system title transfer and 

documentation, to accommodate trading and delivery needs of its customers. This service, which is offered 

by Sabine Hub Services Company, a non-federal jurisdictional subsidiary of EnLink Midstream, enhances 

the natural gas trading environment for producers, marketers, and end-users with respect to meeting their 

physical and financial requirements. In addition, the number of interruptible transportation customers of 

Henry Hub has grown to approximately 160 market participants.

III. Physical Market Trading Structure and Term Contracts

A. Physical Market Trading Structure

Typically, there is a chronology of sales and purchases of natural gas in the U.S. market that starts with a 

sale from producer and finishes with a purchase by an end-user to consume the natural gas, typically far 

downstream of the U.S. Gulf Coast. First-sales are from producers to marketers or other middleman-type 

firms with delivery at the production point or where natural gas first enters the pipeline system (or liquids

3 https://sabinepipeline.enlink.com/

15
processing facility attached to the system). The first-sale buyer transports it from the point of sale 

downstream. Typically, the first-sale buyer resells the natural gas to someone other than the end-user. 

Sales to end-users, who do not further resell the natural gas but ultimately consume it, are final-sales.

As implied, sometimes end-users also resell natural gas, frequently during the same commercial cycle in 

which they purchased it. Other buyers of resold natural gas also either resell it or store it and resell it later. 

A common commercial practice is the first-sale and multiple subsequent re-sales occurring in the same 

delivery cycle; this line of re-sales usually includes a final sale, but not always, since a significant portion of 

natural gas is stored.

Henry Hub is essentially an active reseller market where buyers either: resell the natural gas to someone 

else at Henry Hub; transport it downstream for delivery and re-sale to someone else; transport it 

downstream to consume it; or transport it downstream to store it. Most of the sales and deliveries in the 

Henry Hub are comprised of volumes for re-sale, storage or final-sales. In fact, the commercial physical 

market in Henry Hub sales is estimated to be 7-8 times the multiple of physical natural gas that flows 

through Henry Hub, which is a direct indication that most sales are for re-sale. Platts Gas Daily and Inside

F.E.R.C. publish transaction information for delivery at Henry Hub but do not capture all transactions that 

occur at the Henry Hub.

B. Term Contracts

The Exchange contacted and surveyed natural gas market participants regarding common commercial 

practices, including the use of term contracts, in the North American natural gas market.4 The responses 

we received were consistent and can be summarized as follows:

• Most first-sales of production are sold term, as indicated above, typically for delivery on the 

producing property or nearest entry to the pipeline system, including liquids processing plants, and 

typically to middleman-firms. These middleman-firms typically resell the natural gas to other 

middleman-firms or to market participants performing that function or to end-users. Gulf Coast 

market participants estimated re-sales ranging from 50% to over 90%—skewing towards the higher 

end. Some market participants indicated they did not know of exceptions but did not estimate 100% 

of first sales to be ultimately resold.

• No restrictions typically apply to the resale of natural gas bought first-sale on a term basis from 

producers. In fact, restrictions would clearly not be applicable because sales are typically to 

marketers or others acting in a middleman-firm role with the expressed responsibility of reselling 

the natural gas. The participants with whom we spoke indicated that they had not encountered any 

restrictions. Several market participants did point out that “burner-tip” sales—i.e. to utilities—could 

entail a restriction on the utility from reselling the natural gas; however, they made clear that such 

sales, in their experience, were downstream of first-sales and first re-sales as well, especially in 

the U.S. Gulf Coast.

• Henry Hub is largely downstream of first-sales; some first-sales take place there but, typically, not 

as part of a term sale. Consequently, natural gas production that is readily accessible to Henry Hub 

in terms of transportation is also readily accessible commercially. Natural gas that has readily 

accessible transportation to Henry Hub is not otherwise committed and unavailable to be delivered 

at Henry Hub.

• Term sales do not result in reductions to the deliverable supply for Henry Hub. All market 

participants agreed that natural gas purchased on a term sale is available for re-sale and delivery, 

including to the Henry Hub and that all market participants downstream of first-sales participate in 

the market for resale (as some first-sellers do).

• Our sources expressly advised us that any production sold long-term was available for re-sale, 

which is especially the case in the U.S. Gulf Coast market and the Henry Hub.

4 The Exchange contacted 15 firms, surveying 10, as well as a market participant group that included several dozen members. The 

individually contacted firms included major producers and marketers. The Energy Market Participant Group was organized through 

Hunton & Williams LLP to discuss and comment on regulatory issues.

16
IV. Deliverable Supply Estimates and Supporting Data

The factors considered in evaluating deliverable supply are natural gas production, deliverable capacity at 

the Henry Hub, and natural gas storage.

A. Natural Gas Production

The Exchange reviewed monthly data reported by EIA for Federal Offshore – Gulf of Mexico Natural Gas

Marketed Production (Table 1 below) from January 2018 through November 2020. The monthly average 

offshore natural gas production was approximately 8,124 contract equivalents for 2018, 8,461 contract 

equivalents in 2019, and 6,358 contract equivalents from January 2020 -November 2020(contract size: 

10,000 MMbtu). Federal Offshore production is a subset of production that is readily accessible to be 

delivered at the Henry Hub.

The Exchange also reviewed monthly data reported by EIA for Louisiana Natural Gas Marketed Production 

(Table 2 below) and Texas Natural Gas Marketed Production (Table 3 below) from January 2018 through

November 2020. The monthly average onshore production for Louisiana was approximately 23,603 contract 

equivalents in 2018, 26,864 contract equivalents in 2019, and 26,421 contract equivalents from January

2020 – November 2020. The monthly average onshore production for Texas for 2018 was approximately

67,008 contract equivalents, 77,513 contract equivalents in 2019, and 77,101 contract equivalents from 

January 2020 to November 2020.

However, the onshore Louisiana and Texas production data includes production from certain regions of the 

states that would not be readily accessible to the Henry Hub. Consequently, even though EIA is the preeminent official source for production data, the Exchange relied on production estimates reported by Bentek 

which captures data for specific offshore and onshore areas that are accessible to the Henry Hub.

Table 5 provides Bentek’s estimates of daily natural gas production accessible to the Henry Hub for 

Onshore and Offshore Louisiana, Texas, Mississippi and Alabama in million cubic feet for the period 

beginning January 2018 through December 2020. According to Bentek, average monthly onshore

production accessible to the Henry Hub for the 2018 – 2020 period was approximately 4,410 contract 

equivalents, 6,228 contract equivalents, and 7,860 contract equivalents (through December 31), 

respectively. Average offshore production accessible to the Henry Hub for the 2018-2020 period was 

approximately, 8,358 contract equivalents 9,348 contract equivalents and 9,240 contract equivalents 

(through December 31), respectively. Additionally, as illustrated in Table 6 below, average offshore natural

gas production accessible to the Henry Hub as estimated by Bentek yielded totals that were comparable to 

EIA’s average of Federal offshore production. It should be noted that Bentek’s offshore production data

includes state offshore production that is directed to the Interstate pipeline system.

Total annual average of onshore and offshore production as estimated by Bentek for the period beginning 

January 2018 through December 2020 is approximately 12,768 contract equivalents,15,576 contract 

equivalents and 17,100 contract equivalents, respectively.

The Exchange monitors production regularly and, in light of the continued production in the Gulf Coast 

region and other areas, anticipates the continuing central role provided by the Henry Hub as a delivery 

mechanism for natural gas. The production quantities included in these estimates represent production that 

is tendered in the secondary (or spot) market and which could easily access the Henry Hub delivery 

mechanism to dependably fulfill a secondary (or spot) market delivery at the Henry Hub. The actual delivery 

path for production depends on the actual commercial activity each month in the secondary market, 

including delivery obligations for NYMEX natural gas contracts. There are multiple delivery points (including 

the Henry Hub) where such secondary market deliveries can take place for this production and the actual 

delivery locations for specific production each month fluctuates with its corresponding secondary market 

transactions.

17
B. Henry Hub Deliverable Capacity

According to the Form 10-K report5 which EnLink Midstream filed with the U.S. Securities and Exchange 

Commission (SEC) in 2014, Henry Hub transfer services capacity is 2.1 Bcf per day or 2,100,000 MMBtu 

per day. This converts into 210 contract equivalents per day or 6,300 contract equivalents per month.

According to the Henry Hub pipeline receipt and delivery operating capacity as published on the Sabine 

Pipe Line Co. website, the inflowing natural gas daily receipts operating capacity is 3,385,000 Dth which is 

equivalent to 3,385,00 MMBtu. The outflowing natural gas daily deliveries operating capacity is 3,165,000

Dth which is equivalent to 3,165,000 MMBtu.

Additionally, the Exchange has taken into consideration backhaul in estimating the deliverable supply. 

Displacement or backhaul refers to gas flows that are scheduled in the opposite direction of existing 

scheduled flow in a pipeline, at a storage facility or at a Hub that accommodates delivery such as the Henry 

Hub. Displacement is a standard component of transportation services provided under FERC Gas Tariff6 

of Sabine Pipe Line in accordance with FERC regulations. This mechanism is integral to the network and 

considered as a common practice in pipeline operations.

Displacement can occur at any interconnect or point(s) on a natural gas pipeline system when volumes 

nominated and scheduled to flow in one direction are displaced by volumes nominated and scheduled to 

flow in the opposite direction. It is important to note that all confirmed nominations are viewed as flowing 

gas but only the net result of scheduled nominations flowing opposite directions at the same point will 

actually physically flow. The remaining volumes not displaced will determine the direction of actual physical 

flow through the inlet and outlet meters at the Henry Hub. Additionally, backhaul is coordinated directly by 

interconnecting pipeline operators as a natural consequence of scheduled nominations between the two, 

without any special distinction or notification to shippers. Also, the Exchange has confirmed with the pipeline 

operator that incorporating displacement is both reasonable and appropriate.

In evaluating delivery capacity, the Exchange calculated the average monthly backhaul deliveries and 

receipts for all interconnects based on Design and Available capacities data provided by EnLink Midstream 

from January 1, 2018 to December 31, 202013,7. Given that the inflowing natural gas receipts capacity is 

greater than the outflowing natural gas deliveries capacity, the Exchange determined at this time to use the 

outflowing natural gas deliveries capacity, which is the lower of the two numbers, in its evaluation of 

deliverable supply.

Based on the methodology described above, the Exchange estimated the backhaul capacity at the Henry 

Hub based on the following a three-step approach:

Step 1: The Exchange first calculated the monthly backhaul capacity at every interconnect for each 

month based on all daily observations.

Step 2: The Exchange summed up the largest monthly backhaul capacity at every interconnect over 

each 12-month interval over the 3-year timeframe. Accordingly, the total is 15,350,901 mmBTU for the 

January 2018 to December 2018 period, 9,513,024 mmBTU for the January 2019 to December 2019 period, 

and 14,403,980 mmBTU for the January 2020 to December 2020 period.

Step 3: The Exchange averaged the three calculated values. Accordingly, the estimate of the backhaul 

capacity at the Henry Hub is approximately 13,089,302 mmBTU which is equivalent to 1,309 contractsper 

month.

The frequency and the magnitude of backhaul has increased notably during the last few years due to 

the following major market developments:

5 https://www.sec.gov/Archives/edgar/data/1592000/000159200015000005/enlc201410-k.htm

6 http://www.gasnom.com/ip/sabine/fileviewer.cfm?FromLoc=Tariff&file=tariff.pdf

Texas Gas missing data from February 2016 till July 2016

13 Unavailable data which was not provided by the hub operator December 2018 for Acadian and from 05/27/2019 to10/21/2019 for 

Columbia Gulf interconnects

18
• Historically, US Gulf Coast (“USGC”) has been a major production basin where natural gas is 

produced and procced then shipped to major demand center in Northeast, Midwest and Southeast 

via long-haul pipelines including the ones interconnected with the hub. However, the shale 

revolution has redefined the supply structure and Northeast is becoming a net exporter area 

displacing excess gas to the other markets including USGC.

• USGC is undergoing a fundamental shift and becoming a major consumption destination 

specifically with LNG export terminals. Henry Hub supports feeding feedstock gas to Cheniere’s 

Sabine Pass Liquefaction through NGPL interconnect. The terminal has four primary routes into 

the plant: NGPL from TexOk, NGPL from Henry Hub, Creole Trail, and Transco.

C. Natural Gas Storage in State of Louisiana and Producing Area

The Exchange reviewed monthly data reported by EIA for Louisiana Natural Gas Underground Storage 

Volume (Table 4 below) from January 2017 through November 2020. The monthly average for storage for 

Louisiana and producing regions (Alabama, Arkansas, Kansas, Louisiana, Mississippi, Oklahoma, and 

Texas) for the 2017 – 2020 period was approximately 60,177 contract equivalents, 51,432 contract 

equivalents, 54,126 contract equivalents, and 63,268 contract equivalents, respectively.

D. Deliverable Supply Estimates

Given that production and storage levels exceed deliverable capacity, as noted above, deliverable capacity 

continues to be the constraining factor in estimating deliverable supply.

Based on the above analysis and as shown in Table 7, the Exchange determined at this time to base its 

estimates of deliverable supply solely on transfer services capacity and average monthly backhaul capacity 

at the Henry Hub (6,300 + 1,309 contracts per month) which is equal to 7,609 contracts per month. The 

current spot month position limit of 1,000 contracts represents approximately 13% of the estimated monthly 

deliverable supply. Twenty-five percent (25%) of the estimated monthly deliverable supply is 1,902.25. 

Rounding to the nearest hundreds, the proposed spot month position limit for the Natural Gas Futures 

Contract is 2,000 contracts. 

 

19
Table 1

Federal Offshore--Gulf of Mexico Natural Gas Marketed Production 

(Million Cubic Feet)8

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

 2017 10,124 8,844 10,157 9,081 9,523 8,676 9,389 8,883 8,443 7,650 7,805 7,472

 2018 7,442 7,133 8,045 7,241 7,484 7,576 8,818 9,429 8,518 8,268 8,679 8,854

 2019 9,016 7,674 9,203 8,720 8,772 8,164 6,682 9,122 8,411 8,670 8,363 8,738

 2020 8,474 7,834 8,467 7,759 6,330 6,071 6,734 4,341 4,745 3,708 5,475

Table 2

Louisiana Natural Gas Marketed Production 

(Million Cubic Feet)9

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

 2017 15,956 14,335 17,847 15,395 16,169 16,635 16,599 18,267 18,616 20,673 20,880 22,613

 2018 21,085 19,984 22,979 22,232 23,874 23,681 24,550 24,849 24,059 25,926 24,743 25,277

 2019 25,904 24,211 26,752 26,079 27,046 26,573 27,822 27,677 26,666 27,949 27,079 28,608

 2020 27,906 25,176 26,612 26,271 27,367 26,382 26,551 25,789 25,468 26,340 26,771

Table 3

Texas Natural Gas Marketed Production 

(Million Cubic Feet)10

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

 2017 56,538 52,444 59,665 58,845 60,724 59,389 62,373 60,644 59,854 64,375 63,400 64,132

 2018 61,754 57,789 66,105 63,665 67,403 65,891 67,494 69,528 69,328 71,001 71,835 72,308

 2019 73,651 67,580 75,635 72,522 77,837 76,432 80,327 83,641 78,557 82,370 79,066 82,542

 2020 82,737 77,134 83,214 77,284 73,350 73,310 76,651 78,846 74,630 76,126 74,827

8 https://www.eia.gov/dnav/ng/hist/n9050fx2M.htm

9 http://www.eia.gov/dnav/ng/hist/n9050la2m.htm

10 http://www.eia.gov/dnav/ng/hist/n9050tx2m.htm

20
Table 4

Louisiana Natural Gas Underground Storage 

Volume (Million Cubic Feet) 11

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

 201

7

59,48

8

58,29

7

56,02

3

58,23

7

60,21

1

60,66

8

60,60

6

60,22

7

62,55

4

63,93

2

62,73

0

59,14

9

 201

8

49,59

2

47,93

7

47,23

0

46,44

0

50,63

5

52,40

9

51,70

7

52,21

1

54,18

7

56,77

2

54,54

1

53,52

8

 201

9

47,38

1

42,34

0

40,48

2

46,13

8

50,44

7

54,35

3

56,13

9

57,22

1

61,06

2

65,57

2

65,17

3

63,20

2

 202

0

58,17

3

52,78

8

55,35

1

60,52

2

63,88

3

66,21

3

65,64

9

67,21

0

68,76

9

68,19

7

69,18

8

Table 5

US Gulf Natural Gas Production Accessible 

to Henry Hub (Million Cubic Feet per Day) 12

Available LA/TX/MS/AL Natural 

Gas Supply 2018 2019 2020

Bentek LA Offshore YTD 1,466 1,792 1,819

Bentek LA Onshore YTD 266 310 293

Bentek TX Offshore YTD 250 174 162

Bentek TX Onshore YTD 1,071 1,651 2,203

Bentek MS Offshore YTD 588 648 617

Bentek AL Offshore YTD 482 502 482

Bentek AL-MS-FL Onshore YTD 133 115 124

Total Bentek LA, TX, MS/AL 

4,256 

 

5,192 5,700

Daily Contract Equivalent (CE) 

426 

 

519 570

30-Day Month CE 

12,768 

 

15,576 17,100

25% of 30-Day Month CE 

3,192 

 

3,894 4275

Available Natural Gas Supply 2018 2019 2020

21
Total Bentek Offshore LA, TX, 

MS/AL

 

2,786 

 

3,116 

 

3,080 

Daily Contract Equivalent (CE) 

278.60 

 

311.60 

 

308.00 

30-Day Month CE 8,358 9,348 9,240

Available Natural Gas Supply 2018 2019 2020

Total Bentek Onshore LA, TX, 

MS/AL

 

1,470 

 

2,076 

 

2,620 

Daily Contract Equivalent (CE) 

147 

 

208 

 

262 

30-Day Month CE 

4,410 

 

6,228 

 

7,860 

Table 6

Monthly Average Offshore Production Accessible to Henry Hub 

Estimated by Bentek vs. EIA Monthly Average of Federal Offshore 

Production

(In Contract Equivalents)

Table 

7 Deliverable 

Supply Estimates

Year Bentek EIA

2018 9,240 8,124

2019 9,348 8,461

2020 8358 6,358

Transfer Services 

Capacity 2,100,000

Monthly Backhaul 13,089,302

Transfer Capacity 

Daily Contract 

Equivalent

210

Transfer Services 

Capacity Monthly 

Contract Equivalent

6,300

Monthly BackhaulContract Equivalent 1,309

DS: Transfer 

Cap+Backhaul 

Contract Equivalent 

7,609

25% Threshold 1,902

% of current Limit 13.14%

22
Appendix D

Analysis of Deliverable Supply – New York Harbor ULSD Futures 

In estimating deliverable supply for the NY Harbor ULSD Futures contract, New York Mercantile 

Exchange, Inc. (“NYMEX” or “Exchange”) relied on long-standing precedent, which provides that the 

key component in estimating deliverable supply is the portion of typical production and supply stocks 

that could reasonably be considered to be readily available for delivery.

Appendix C to part 38 of the Commodity Futures Trading Commission’s regulations defines 

deliverable supply as “the quantity of the commodity meeting the contract’s delivery specifications that 

can reasonably be expected to be readily available to short traders and saleable by long traders at its 

market value in normal cash marketing channels at the derivative contract’s delivery points during the 

specified delivery period, barring abnormal movement in interstate commerce.”

I. Methodology and Data Sources

The Exchange considered four components in evaluating deliverable supply estimates of Ultra Low 

Sulfur Diesel (“ULSD”) for the New York Harbor delivery location of the NY Harbor ULSD Futures 

contract:

A. ULSD production at Bayway Refinery;

B. ULSD deliveries to the NY Harbor on Colonial Pipeline;

C. ULSD storage levels in the delivery area;

D. ULSD imports and exports into the delivery area.

For production, storage and import/exports, the Exchange determined to use data collected by the 

U.S. Department of Energy (“DOE”) Energy Information Administration (“EIA”) for its analysis and 

evaluation of deliverable supply estimates for ULSD in New York Harbor. The EIA provides detailed 

data on the key components of deliverable supply. The EIA provides such data on a weekly, monthly, 

and annual basis.

For ULSD pipeline deliveries, the Exchange relied on a combination of public information disseminated 

by the EIA, Federal Energy Regulatory Commission (“FERC”) as well as private interviews with reliable 

industry sources with whom the Exchange has had a long-standing relationship.

II. Introduction

ULSD is a distillate fuel that has a dual-use as heating oil and as a transportation fuel. As of December 

1, 2010, all on-highway diesel fuel consumed in the United States is ULSD as mandated by federal 

regulations. Unlike diesel fuel used in transportation, heating oil has no federal sulfur content 

restrictions. However, various State initiatives to apply comparable sulfur limits to heating oil are in 

planning or implementation stages in the Northeast, the main heating oil consuming region.

According to the EIA, New England and the Central Atlantic Coast of the United States (collectively 

known as the “Northeast” for data purposes) are the main consumers of heating oil, typically 

accounting for 80% of the sales. As of July 1, 2012, New York State mandated that all heating oil sold 

for residential, commercial and industrial heating applications within the State contain no more than 

15 parts per million (ppm) of sulfur. Following New York’s path, Delaware and New Jersey transitioned 

to 15ppm sulfur content in 2016. As of July 1, 2018, Connecticut, Maine, Massachusetts, Rhode Island 

and Vermont transitioned to ULSD for heating purposes. Figure 1 below is a summary of the 

specification changes to Heating Oil by State.

23
Figure 1 - Heating Oil Sulfur Specification Changes per State14

The NY Harbor ULSD Futures contract is the main benchmark used for pricing the distillate products 

market, which includes diesel fuel, heating oil, and jet fuel. The Exchange has amended the grade 

and quality specifications in response to changes in environmental regulations in the Northeast, 

requiring cleaner, lower sulfur diesel standards for heating oil. Effective beginning with the May-2013 

delivery month, the NY Harbor ULSD Futures contract required delivery of on-road ULSD with a 

maximum of 15ppm sulfur content.

After transitioning to lower sulfur grade in May-2013, the NY Harbor ULSD Futures serves as a dualuse contract that is a price reference and hedging instrument for both the heating oil and on-road 

diesel markets. The heating oil pool will eventually be fully integrated into the ULSD market and the 

widespread adoption of a 15ppm sulfur content limit for heating oil is likely to encourage the 

development of a seamless ULSD distillate market throughout the entire East Coast, according to the 

EIA. Consequently, due to the phase-out of high-sulfur heating oil delivery specifications, the 

Exchange has focused its deliverable supply analysis on the ULSD sector of the distillate fuel market.

New York Harbor Delivery Region

New England and the Central Atlantic Coast of the United States, collectively defined by the EIA as 

the “Northeast”, is a well-connected and integrated geographical region in terms of oil and products 

infrastructure. The region is part of the larger PADD 1 (Petroleum Administration Defense District)15.

Located in both New York and New Jersey, the New York Harbor area is the largest oil importing and 

third largest container port in the nation, and is the main oil and refined products pricing and trading 

hub. Petroleum products in New York Harbor are supplied by refineries located in New Jersey, 

Delaware and Pennsylvania, all located within 100 miles of the New York Harbor area. East Coast 

refineries, a majority of which are located in New Jersey and Philadelphia, send products by local 

pipelines into New York Harbor.

Among the refineries serving the NY Harbor area, Bayway refinery is the largest supplier of ULSD. 

Located on the New York Harbor in Linden, New Jersey, the Phillips-66-owned refinery processes 

14 http://www.eia.gov/forecasts/steo/special/winter/2014_winter_fuels.pdf

15 http://www.eia.gov/analysis/petroleum/nerefining/prelim/

24
mainly light, low-sulfur crude oil. Bayway's refining units include fluid catalytic cracking (FCC), hydro 

de- sulfurization units, a naphtha reformer, an alkylation unit and other processing equipment. The 

refinery’s total crude capacity is 258,000 barrels per day (b/d), while its ULSD capacity is 108,000-

115,000 b/d16.

The Colonial Pipeline is the largest refined products pipeline in the US and a key products supply link 

for the Northeast. The pipeline connects the Northeast to refinery output from the US Gulf Coast and 

foreign imports, principally from Canada, Virgin Islands, Caribbean and Europe. Colonial's network of 

pipelines crosses 11 states, serving more than 260 marketing terminals in the Southern and Eastern 

United States. The pipeline provides a link from the US Gulf Coast to the New York Harbor area 

through the south and across the Eastern seaboard. It generally takes from 14 to 24 days for a product 

batch on the Colonial Pipeline to get from Houston, Texas to the New York Harbor, with 18.5 days the 

average time. The Philadelphia-area refineries are strategically located along the Colonial Pipeline.

In 2011, Colonial expanded the northern end of its Houston-to-New York system, adding 100,000 

barrels per day (b/d) of capacity. In addition, the company completed a series of system upgrades 

leading to more than 100,000 b/d of capacity for distillates17 specifically serving the New Jersey, 

Pennsylvania, and New York markets. Also, Colonial Pipeline added an additional 100,000 b/d of

gasoline and distillates capacity in early 201318 to meet demand in on the northern portion of the line 

(Greensboro, NC to Linden, NJ).

The Harbor Pipeline is an approximately 80-mile 171,000 b/d19 refined product common carrier 

pipeline originating near Woodbury, New Jersey and terminating in Linden, New Jersey. It is majorityowned and operated by Sunoco Logistics.

Many of the petroleum products delivered to New York Harbor are redistributed to smaller ports where 

they supply local demand. In particular, the Hudson River, which meets the Atlantic Ocean in New 

York Harbor, provides a major inland water route for petroleum product barges supplying eastern New 

York and parts of western New England. Significant volumes are shipped to New England via barge 

from New York Harbor. On the other side of the State, western New York product markets are primarily 

supplied from Canada at the Port of Buffalo, and via the Buckeye and Sunoco Logistics pipeline 

systems from Pennsylvania and the Midwest20. Figure 2 below illustrates the logistics of refining and 

products transportation in the Northeast.

16 http://www.phillips66.com/EN/about/our-businesses/refining/Pages/Bayway-Refinery.aspx

17 http://www.eia.gov/pressroom/presentations/sieminski_10102012.pdf

18 http://www.colpipe.com/home/news-media/press-releases/pressdetail?ID=7cb2e327-d0b3-6eb4-9c07-ff00009907dd

19 http://investor.phillips66.com/financial-information/sec-filings/sec-filings-details/default.aspx?FilingId=11867386

20 http://205.254.135.7/state/state-energy-profiles-analysis.cfm?sid=NY

25
Figure 2 - Northeast Refined Products Market Logistics21

As of January 1, 2020, there were 135 operating refineries, in which 131 were operating in the United 

States with total atmospheric crude oil distillation capacity of over 19.0 million barrels per calendar 

day22. On the East Coast (PADD 1), there are eight operable refineries, in which seven are currently 

operating with 1.2 million b/d of atmospheric crude distillation capacity. The region has 502,500 b/d of 

fluid catalytic cracking (FCC) capacity. PADD 1 includes all states in New England, the Mid-Atlantic, 

and the South Atlantic and is subdivided into three sub-PADDs.

• PADD 1A – New Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut

• PADD 1B – New York, Pennsylvania, New Jersey, Delaware, Maryland, District of Columbia

• PADD 1C - West Virginia, Virginia, North Carolina, South Carolina, Georgia, Florida

Supply dynamics for each of the three sub-PADDs vary. PADD 1A, New England, has no refineries 

and relies on imports and transfers from other PADDs, primarily PADD 1B. PADD 1C, the South 

Atlantic, also has no operating refineries and relies primarily on pipeline transfers and marine 

shipments from PADD 3 and imports. PADD 1B is supplied by a combination of in-region refineries, 

transfers from other PADDs - primarily from PADD 3- and imports23.

The majority of PADD 1B refineries are located in New Jersey, Delaware and Pennsylvania, and within 

100 miles of the New York Harbor area. These refineries are directly connected to the New York 

Harbor market by local pipelines and/or waterborne barges. A list of Northeast refineries is provided 

in Table 1.

Table 1 – Mid-Atlantic (PADD 1B) Refineries

Name State Owner Capacity Status

Delaware City 

Refinery Co LLC Delaware City, DE PBF Energy Co LLC 182,200 b/d Operational

21 http://www.eia.gov/analysis/petroleum/nerefining/update/pdf/neprodmkts.pdf

22 http://www.eia.gov/dnav/pet/pet_pnp_cap1_dcu_nus_a.htm

23 http://www.eia.gov/petroleum/refinery/outage/pdf/refinery_outage.pdf

26
Paulsboro Refining 

Co LLC Paulsboro, NJ PBF Energy Co LLC 160,000 b/d Operational24

Phillips 66 

Company Linden, NJ Phillips 66 Company 258,000 b/d Operational

American Refining 

Group Inc Bradford, PA American Refining Group Inc 11,000 b/d Operational

Philadelphia Energy 

Solutions Philadelphia, PA Carlyle Group 335,000 b/d Idle

United Refining Co Warren, PA Red Apple Group Inc 65,000 b/d Operational

Monroe Energy 

LLC Trainer, PA Delta Airlines Inc 190,000 b/d Operational

III. Deliverable Supply Estimates

A. ULSD Production

According to EIA’s “Refinery Capacity by Individual Refinery” data25 as well as data reported by 

Phillips- 6626, the total distillate fuel capacity at the Bayway refinery is approximately 108,000-130,000 

b/d. Industry interviews indicate that almost all of Bayway’s distillate fuel capacity is used for ULSD 

production. In estimating ULSD production at the Bayway refinery, the Exchange adjusted the capacity 

figure downward due to seasonal factors, to 108,000 barrels per day. Further, EIA provides operable 

refinery utilization rates for the “East Coast” area of PADD 1, which is an accurate representation of 

the utilization rate for the Bayway refinery. EIA’s operable utilization rates represent the utilization of 

the atmospheric crude oil distillation units and are calculated by dividing the gross input to these units 

by the operable calendar day refining capacity of the units. Accordingly, the EIA refinery utilization rate 

is 81.6% utilization for the three-year period of 2017 through 2019

27 (88.4%, 85.0% and 71.3% 

respectively). Finally, according to industry sources at Phillips-66, it was explained that approximately 

10,000 barrels per day of ULSD production are committed to long-term customers. Therefore, after 

accounting for long- term commitments, the net ULSD production at Bayway Refinery is estimated at 

78,128 b/d, or approximately 2.34 million barrels per month.

Table 2 - Bayway Refinery Production

ULSD

Capacity 

(b/d)

Capacity 

Utilization 

(3-Year 

Average)

Net ULSD

Production 

(b/d)

ULSD Production 

committed to Long-Term 

Contracts (b/d)

Net ULSD Production 

Barrels per Month

108,000 81.6% 88,128 10,000 2,343,840

B. ULSD Deliveries

The main pipeline supplying ULSD to the NY Harbor market is the Colonial Pipeline. Data for precise 

ULSD flows are not publicly shared by pipeline operators, however the Exchange estimated these 

figures using a combination of publicly available data and industry interviews.

To estimate the amount of ULSD on the Colonial Pipeline, the Exchange utilized a five-step approach.

➢ Step 1: The Exchange collected data on distillate fuel oil delivered on the pipeline as reported

24 Paulsboro Refinery Reconfiguration and Optimization, https://investors.pbfenergy.com/news/2020/10-29-2020-103142029

25 Refinery Capacity by Individual Refinery Data: https://www.eia.gov/petroleum/refinerycapacity/refcap20.xls under the 

category “desulfurization, diesel fuel”

26 http://www.phillips66.com/EN/about/our-businesses/refining/Pages/Bayway-Refinery.aspx

27 http://www.eia.gov/dnav/pet/pet_pnp_unc_dcu_rec_a.htm

27
to the FERC in Form 6 for years 2017-2019

28 as year 2020 is not yet available. These reports 

are designed to collect both financial and operational informational from oil pipeline 

companies subject to FERC jurisdiction. Table 3 illustrates total deliveries in barrels per year.

Accordingly, the three-year average is reported at 279,276,824 barrels.

Table 3 – Colonial Pipeline Distillate Fuel Deliveries

Total Delivered Out (YTD 

Barrels)

2017 282,066,510

2018 275,256,167

2019 280,507,795

Average (2017 – 2019) 279,276,824

➢ Step 2: To estimate the portion of shipped distillates that is ULSD, the Exchange used the 

percentage of ULSD shipments for PADD 1 as reported by the EIA. The Exchange believes 

that the share of ULSD out of total distillates shipped from PADD 3 to PADD 1 is representative 

of the ULSD shipments on the Colonial Pipeline. As illustrated in Table 4 below, in the 2017-

2019 timeframe, total distillates shipped from the Gulf Coast (PADD 3) to PADD 1 averaged 

at 305,067,000 barrels29 per year. In the same time period, the ULSD (0-15 ppm Sulfur) 

shipments from PADD 3 into PADD 1 averaged at 285,414,000 barrels30 per year, which is 

93.53% of all distillates.

28 See Page 601.2, Line 19, Column (i) at:

FERC Form 6 2017, page 601.2 box i19, https://elibrary.ferc.gov/eLibrary/filedownload?fileid=14893902

FERC Form 6 2018, page 601.2 box i19, https://elibrary.ferc.gov/eLibrary/filedownload?fileid=15222963

FERC Form 6 2019, page 601.2 box i19, https://elibrary.ferc.gov/eLibrary/filedownload?fileid=15513650

29 http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mdimxp1p31&f=a

30 http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=md0mx_r10r30_1&f=a

28
Table 4 – PADD 1 Receipts by Pipeline, Tanker and Barge from PADD 3 (Thousand Barrels)

ULSD (0-15 ppm) Total Distillates %ULSD

2017 269,618 291,693 92.43%

2018 286,868 308,300 93.05%

2019 299,756 315,207 95.10%

Average

(2017 – 2019) 285,414 305,067 93.53%

➢ Step 3: To estimate ULSD shipments specific to the Colonial Pipeline, the Exchange applied 

the ULSD percentages applicable to PADD 1 from Step 2 above on total ULSD distillate fuel 

deliveries from Step 1. Table 5 below shows that approximately 261,199,666 barrels of ULSD 

per year which is equivalent to 21,766,639 barrels per month was shipped on the Colonial 

Pipeline in the 2017-2019 timeframe.

➢

Table 5 – Colonial Pipeline ULSD Deliveries

Total Delivered 

(Step 1)

% ULSD 

(Step 2)

ULSD Shipped on 

Colonial Pipeline 

(Barrels)

ULSD Shipped on 

Colonial Pipeline

(Barrels per Month)

2017 282,066,510 92.43% 260,720,032 21,726,669

2018 275,256,167 93.05% 256,121,265 21,343,439

2019 280,507,795 95.10% 266,757,701 22,229,808

Average 

(2017- 2019)

261,199,666 21,766,639

➢ Step 4: Previously, the Exchange calculated the amount of ULSD that was shipped on the 

Colonial Pipeline and delivered to the NY Harbor market, which is the terminus of the Colonial 

Pipeline. This calculation methodology was based on the surcharge that was assessed by 

FERC on ULSD shipments on Colonial Pipeline for the time period of 2014 through 2016. 

This ULSD surcharge was a temporary fee that was mandated by FERC and publicly reported 

by Colonial Pipeline for all ULSD shipments during the time period of 2014 through 2016. This

FERC surcharge was discontinued at the end of 2016. Based on this reported surcharge 

data, the Exchange was able to calculate the amount of ULSD that was shipped on Colonial 

Pipeline and delivered in NY Harbor. Not all ULSD shipped on Colonial Pipeline is delivered 

to the NY Harbor delivery region, so the Exchange performed a calculation to estimate the 

New York Harbor-delivered ULSD shipments using FERC Form 6 and tariff data. Per FERC 

Order IS07-8631 ULSD that was delivered south of Philadelphia to the Colonial Pipeline 

terminal in Booth, PA was subject to an annual total surcharge that was reported to the 

FERC through Form 632 for the time period of 2014 through 2016.

31 http://elibrary.ferc.gov/idmws/file_list.asp?document_id=4472753

32

 See Schedule Page 300, Line 2, Column C at:

FERC Form 6 for 2013 http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=13518863 page 601.2 box i19

FERC Form 6 for 2014 http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=13844493 page 601.2 box i19

FERC Form 6 for 2015 http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=14207820 page 601.2 box i19

29
According to Table 6 below, in the 2014-2016 timeframe, the ULSD surcharge on the Colonial 

Pipeline averaged $8,837,556. In addition, on January 1, 2017, Colonial Pipeline discontinued 

the ULSD surcharge, therefore the Exchange used the time period of 2014 – 2016 for which 

the surcharge data is available33. This FERC surcharge data provides valuable information

that can be used to calculate the amount of ULSD that is delivered to the NY Harbor market 

on the Colonial Pipeline.

Table 6 – Colonial Pipeline Surcharge for ULSD Deliveries South of Booth, PA

Total 

Surcharge ($)

2014 7,666,428

2015 9,319,899

2016 9,526,342

Average

(2014 – 2016) 

8,837,556

To calculate the number of ULSD barrels subject to the surcharge, the Exchange used a per 

barrel surcharge rate applicable to each year. These rates are reported to the FERC via tariff 

schedules34 and illustrated in Table 7 below. The average surcharge was calculated by taking 

an average of the surcharges that were in place, weighted by how long they were in effect 

over the course of the year. In 2014, the surcharge of $0.04 was in effect for the first half of 

the year (January-June) and the surcharge of $0.054 was in effect for the second half of the 

year (July- December) so the weights are equally distributed. In 2015, there were three 

reported surcharges; the surcharge of $0.054 was effective for the first half of the year 

(January - June) while the surcharge of $0.056 was effective July-December, so despite 

having only three reported surcharges instead of four, the weights are also distributed equally. 

In 2016, there were four reported surcharges in which the rate remained unchanged. For the 

2014-2016 timeframe, the average surcharge rate per barrel was $0.053.

Table 7 – Colonial Pipeline ULSD Surcharge Rate for Delivery South of Booth

Year Docket Number

Reported Surcharge 

(per barrel)

Average Annual 

Surcharge

2014 IS14-122 $0.040

$0.047 2014 IS14-272 $0.040

2014 IS14-516 $0.054

2014 IS14-673 $0.054

2015 IS15-51 $0.054

2015 IS15-124 $0.054 $0.055

2015 IS15-403 $0.056

2016 IS16-61 $0.056

33 Docket Number IS17-106, https://elibrary.ferc.gov/idmws/common/OpenNat.asp?fileID=14442959.

34 To locate these documents, go to http://elibrary.ferc.gov/idmws/search/fercgensearch.asp For the “Date Range” field, 

select "All". In the "Docket Number" field, type the relevant Docket Numbers provided in Table 7. Then click "Submit" at the 

bottom. The result will be the full docket file. In the furthest right column, click "FERC Generated PDF". In the PDF, search 

for Item 125 and the surcharge is found within the text.

30
2016 IS16-258 $0.056

$0.056 2016 IS16-628 $0.056

2016 IS16-694 $0.056

Dividing total surcharge by average surcharge rate gives the estimated ULSD shipments 

south of Booth, PA as displayed in Table 8. ULSD barrels delivered North of Booth, PA were 

calculated by subtracting ULSD barrels delivered South of Booth from the total ULSD shipped 

on Colonial Pipeline as shown in Table 5. This calculation derives the amount of ULSD that 

is shipped North of Booth, PA on Colonial Pipeline to the NY Harbor market. The calculation

results as performed by the Exchange are displayed in Table 8 below. The Exchange

estimated the total ULSD shipments delivered North of Booth, PA to be 105,360,102 barrels 

per year in 2014-2016. This is equivalent to 8,780,008 barrels of ULSD per month shipped 

on the Colonial Pipeline to destinations that are North of Booth, PA. which is approximately 

40%of the total amount of ULSD shipped on the Colonial Pipeline as reported in Table 5 

above.

Table 8 – Colonial Pipeline ULSD Barrels

Total Surcharge

($)

Surcharge 

Rate per 

Barrel

ULSD Barrels 

South of 

Booth

ULSD Barrels 

North of 

Booth 

(Annually)

ULSD Barrels 

North of Booth 

(Monthly)

2014 7,666,428 0.047 163,115,489 95,514,435 7,959,536

2015 9,319,899 0.055 169,452,709 119,179,504 9,931,625

2016 9,526,342 0.056 170,113,250 101,386,367 8,448,864

Average

(2014 – 2016)

8,837,556 0.053 167,560,483 105,360,102 8,780,008

➢ As the last step in estimating the amount of ULSD shipped on the Colonial Pipeline and 

delivered to the NY Harbor area, the Exchange reduced the amount of ULSD shipments

delivered North of Booth, PA to account for ULSD barrels supplied by Philadelphia refiners

to the Pennsylvania market that are not destined for the New York Harbor market. According 

to the EIA Prime Suppliers Sales Volumes data35 for Pennsylvania in 2017-2019, sales of total 

distillates from Pennsylvania refineries averaged 5,916,333 gallons per day (or 140,865

barrels per day), which is equivalent to 4,225,952 barrels per month. The EIA data reports 

the volume of total distillates supplied to Pennsylvania, of which around 90% or more is ULSD.

To arrive at the estimated amount of ULSD shipped on the Colonial Pipeline to the NY Harbor

area (excluding Philadelphia refinery supplies), the Exchange subtracted 4,225,952 barrels 

from 8,780,008 from Table 8 to obtain 4,554,056 barrels per month.

Previously, based on the FERC surcharge data for the three-year period from 2014-2016, the Exchange 

estimated 8,780,008 ULSD barrels per month were shipped north of Booth, PA in the Philadelphia area 

which represented approximately 40% percent of total Colonial Pipeline ULSD shipments from PADD 3 

to PADD 1. 

Although Colonial Pipeline discontinued the FERC surcharge on ULSD as of January 1, 2017, the 

35 https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=C200012421&f=A

31
Exchange believes the percentage of pipeline shipments on average has remained fairly constant and

is still a reliable estimate of the amount of ULSD that reaches New York Harbor which is the end point 

of the Colonial pipeline. 

To be conservative, the Exchange did not reduce the total distillates supplied by Pennsylvania refiners 

because ULSD accounts for over 90% of total distillates shipped to PADD 1. Therefore, the previous 

surcharge methodology is still valid for determining the percentage of ULSD shipments that flow on the 

Colonial Pipeline to the NY Harbor market. Therefore, the Exchange has determined that the total ULSD 

supplied to NY Harbor via Colonial Pipeline is 4.55 million barrels per month. 

32
C. Inventories of ULSD in the New York Harbor Market

New York Harbor has a petroleum bulk terminal storage capacity of over 75 million barrels, making it the 

largest petroleum product hub in the country. For the purposes of ULSD delivery in NY Harbor against 

the NYMEX NY Harbor ULSD Futures contract, the Exchange has 17 approved delivery terminals. 

Based on conversations with these facilities the total cumulative working tank capacity for ULSD at all 

Exchange-approved delivery terminals equals 19,634,293 barrels. Table 9 below details the list of 

facilities approved by the Exchange.

Table 9 – ULSD Facilities in NY Harbor

Name of Facility Facility Code

KINDER MORGAN - CARTERET TRUCK RACK E76

PHILLIPS 66 - TREMLEY POINT E78

INTERNATIONAL MATEX TANK TERMINAL (IMTT) - BAYONNE E79

BUCKEYE PERTH AMBOY TERMINAL LLC E80

BUCKEYE BRONX TERMINAL E81

CITGO - LINDEN E82

FEDERAL TERMINAL - ELIZABETH E84

KINDER MORGAN - CARTERET E85

BUCKEYE PORT READING TERMINAL LLC E86

SPRAGUE - BRONX SEC TERMINAL E88

SHELL OIL PRODUCTS US - SEWAREN E89

ST TERMINAL - LINDEN E91

BUCKEYE BAYONNE TERMINAL E92

KINDER MORGAN - PERTH AMBOY E94

BUCKEYE RARITAN BAY TERMINAL LLC E96

PHILLIPS 66 - BAY WAY E97

CENTER POINT TERMINAL NEWARK, LLC E99

In addition to commercial stocks held in New York Harbor terminals, the Northeast Home Heating Oil 

Reserve (NEHHOR), which was established in 2000 to provide heating fuel supply security in the 

Northeast, has a one million barrel supply of ultra low sulfur diesel. The ULSD is stored in three terminals 

in the NY Harbor area: Groton, Connecticut, Port Reading, New Jersey, and Revere, Massachusetts.

The three-year average of ULSD stocks held in the Central Atlantic, or PADD 1B, region is approximately

21.88 million barrels (See Table 10). According to market participants, the New York Harbor area, which 

includes storage terminals in New York and New Jersey, accounts for 50% to 60% of the inventories 

reported in EIA’s PADD 1B statistics. Using a conservative estimate of 50% of PADD 1B inventories, the 

average stock level of ULSD is estimated to be approximately 10.94 million barrels in New York Harbor.

Table 10 – Central Atlantic (PADD 1B) ULSD Stocks

Thousand Barrels

(Annual Averages using Weekly Data) PADD 1

36 PADD 1B37

(Central Atlantic)

January 2018 – December 2018 33,901 19,020

January 2019 – December 2019 35,654 18,897

January 2020 – December 2020 50,467 27,712

36 http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WD0ST_R10_1&f=W

37 http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WD0ST_R1Y_1&f=W

33
Average 40,007 21,876

Based on estimates from industry experts, we determined that the operational minimum levels for 

storage tanks in the New York Harbor area are approximately 5% to 10%. Using the more conservative 

estimate of 10%, we therefore estimate that approximately 1.09 million of the 10.94 million barrels of 

stored ULSD are used for operational purposes, leaving approximately 9.84 million barrels available 

for spot month delivery. While the majority of ULSD in storage is available in the spot market, the 

Exchange applied a 20% reduction on storage figures to account for long-term agreements to arrive 

at a final 7.88 million barrels per month figure.

D. Imports and Exports

The New York Harbor area is the largest oil import hub in the US. According to the EIA’s import data 

by port of entry38, ULSD imports into the New York Harbor area (which encompasses New Jersey and 

New York ports) averaged 55,000 barrels per day for the three-year period of December 2017 through 

November 2020. Further, ULSD exports from PADD 1 averaged 20,000 barrels per day for the same 

three-year period39. Based on conversations with industry experts, the Exchange believes that 

approximately 30% of the exports figure represents the NY Harbor delivery area. Therefore, applying 

a 70% reduction to exports resulted in 6,100 b/d in NY Harbor. As a result, the net imports figure for 

December 2017 - November 2020 was 48,900 barrels per day, or 1.47 million barrels per month.

Based on the above analysis, the Exchange determined at this time to base its estimates of deliverable 

supply on the sum of:

A. Bayway Refinery Production: 2.34 million barrels per month

B. ULSD Deliveries on Colonial Pipeline: 4.55 million barrels per month

C. ULSD Storage: 7.88 million barrels per month

D. Net Imports: 1.47 million barrels per month

The Exchange estimates the monthly deliverable supply of ULSD to the New York Harbor (NYH) to 

be approximately 16.24 million barrels, which is equivalent to 16,240 contracts per month (contract 

size 42,000 gallons or 1,000 barrels). Twenty-five percent of deliverable supply would result in a spot 

month position limit of 4,060 futures equivalent contracts. The current spot month position limit for the 

NY Harbor ULSD Futures contract is 1,000 contracts which represents 6.2% of the estimated monthly 

deliverable supply and the proposed spot month limit of 2,000 contracts represents 12.3% of the 

estimated monthly deliverable supply.

APPENDIX

1. PADD 1 and PADD 1B ULSD Stocks (in Thousand Barrels)

Year Month PADD 140 PADD 1B41

2018 Jan 38,253 23,704

38 http://www.eia.gov/petroleum/imports/companylevel/archive/

39 https://www.eia.gov/dnav/pet/pet_move_exp_dc_R10-Z00_mbblpd_m.htm

40 EIA, Monthly averages using weekly data:

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WD0ST_R10_1&f=W

41 EIA, Monthly averages using weekly data:

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WD0ST_R1Y_1&f=W

34
Feb 37,566 22,758

Mar 36,990 22,842

Apr 30,144 17,089

May 26,720 13,696

Jun 27,950 13,594

Jul 30,828 16,643

Aug 35,555 19,965

Sep 38,467 22,164

Oct 36,932 19,780

Nov 34,613 18,462

Dec 32,920 17,852

2019

Jan 38,486 20,435

Feb 37,066 19,943

Mar 34,416 18,208

Apr 30,972 16,038

May 32,394 17,193

Jun 37,299 20,769

Jul 39,662 22,473

Aug 41,071 22,945

Sep 37,595 20,648

Oct 31,476 15,755

Nov 32,152 14,758

Dec 35,901 18,218

2020

Jan 39,003 20,356

Feb 35,972 18,111

Mar 31,271 14,438

Apr 35,815 15,783

May 50,533 26,401

Jun 60,766 34,847

Jul 61,632 35,812

Aug 60,864 35,535

Sep 59,622 34,637

Oct 57,564 32,729

Nov 54,605 31,239

Dec 56,236 31,551

35
Appendix E

Analysis of Deliverable Supply – RBOB Gasoline Futures 

In estimating deliverable supply for the RBOB Gasoline Futures, the New York Mercantile Exchange, 

Inc. (“NYMEX” or “Exchange”) relied on long-standing precedent, which provides that the key component 

in estimating deliverable supply is the portion of typical production and supply stocks that could 

reasonably be considered to be readily available for delivery.

Appendix C to part 38 of the Commodity Futures Trading Commission’s regulations defines deliverable 

supply as “the quantity of the commodity meeting the contract’s delivery specifications that can 

reasonably be expected to be readily available to short traders and saleable by long traders at its market 

value in normal cash marketing channels at the derivative contract’s delivery points during the specified 

delivery period, barring abnormal movement in interstate commerce.”

to the delivery point(s).42

I. Methodology and Data Sources

The Exchange considered three components in evaluating deliverable supply estimates of RBOB

Gasoline for the New York Harbor delivery location of the RBOB Gasoline Futures contract:

(1) Refinery and Blender Production;

(2) Pipeline flows and net receipts to the delivery area;

(3) Storage levels in the delivery area.

The Exchange determined to use data collected by the U.S. Department of Energy’s Energy Information 

Administration (“EIA”) for its analysis and evaluation of deliverable supply estimates for RBOB Gasoline 

in New York Harbor. The EIA provides detailed data on each of the three components of deliverable 

supply.

II. Introduction

The New York Harbor RBOB Gasoline Futures contract is the main benchmark used for pricing of

gasoline in the U.S. petroleum products market. The U.S. gasoline market represents a large physical 

market, with total U.S. refinery capacity of 9.5 million to 10.0 million barrels per day (b/d) of gasoline.

In the U.S. gasoline market, there are two main formulations for gasoline: Reformulated Gasoline and 

Conventional Gasoline, as required by a complex network of federal and state regulations. The U.S. 

Environmental Protection Agency (“EPA”) administers the Clean Air Act (“CAA”) requirements, and

various state agencies regulate their own specific air rules. Under the CAA, the urban areas with the

highest levels of smog pollution are required to use clean-burning Reformulated Gasoline blended with 

10% ethanol. These urban areas include the entire Northeastern United States, California, Chicago, 

Atlanta, and Houston. These areas account for approximately 40% of U.S. gasoline demand. The 10%

ethanol blending requirement in Reformulated Gasoline requires that the ethanol be segregated from

the gasoline at the

wholesale level in the pipeline distribution system. In the wholesale market, the gasoline is shipped 

unfinished (without the ethanol) and it is called Reformulated Blendstock for Oxygen Blending (RBOB). 

The ethanol blending occurs at the last stage of the delivery process when the gasoline is loaded into 

the tanker truck for retail delivery.

42 http://www.ecfr.gov/cgi-bin/textidx?SID=74959c3dbae469e2efe0a42b45b8dfae&mc=true&node=ap17.1.38_11201.c&rgn=div9

36
A. New York Harbor Delivery Region

New England and the Central Atlantic Coast of the United States, collectively defined by the EIA as the 

“Northeast”, is a well-connected and integrated geographical region in terms of oil and products 

infrastructure. The region is part of the larger PADD 143, and is more specifically defined by PADD 1A 

(Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont) and PADD 1B (New 

York, New Jersey, Delaware, Pennsylvania, Maryland, and Washington, DC).44

Located in both New York and New Jersey, the New York Harbor area is the largest oil importing and

third largest container port in the nation and is the main refined products pricing and trading hub. 

Petroleum products in New York Harbor are supplied by refineries located in New Jersey, Delaware and

Pennsylvania, all located within 100 miles of the New York Harbor area. East Coast refineries, a majority 

of which are located in New Jersey, Pennsylvania and Delaware, send products by local pipelines into

New York Harbor.

Many of the petroleum products delivered to New York Harbor are redistributed to smaller ports where

they supply local demand. In particular, the Hudson River is a major inland water route for petroleum 

product barges supplying eastern New York and parts of western New England. Significant volumes are 

shipped to New England via barge from New York Harbor. On the other side of the state, western New

York product markets are primarily supplied from Canada at the Port of Buffalo, and via the Buckeye and

Sunoco pipeline systems from Pennsylvania and the Midwest454.

B. Refineries and Refinery Capacity Overview

The Colonial Pipeline is the largest refined products pipeline in the U.S. and a key products supply link 

for the Northeast. The pipeline connects the Northeast to refinery output from the US Gulf Coast. 

Colonial's network of pipelines crosses 11 states, serving more than 260 marketing terminals in the 

Southern and Eastern United States. It generally takes from 14 to 24 days for a product batch on the 

Colonial Pipeline to get from Houston, Texas to the New York Harbor area, with 18.5 days being the 

average time.

43 https://www.eia.gov/tools/glossary/index.php?id=P#PADD_def

44 https://www.eia.gov/tools/glossary/index.php?id=P#PADD_def

45 http://205.254.135.7/state/state-energy-profiles-analysis.cfm?sid=NY

37
Figure 1 - Northeast Refined Products Market Logistics46

In 2011, Colonial Pipeline expanded the northern end of its Houston-to-New York system by adding

100,000 b/d of capacity. In addition, the company completed a series of system upgrades leading to 

more than 100,000 b/d of capacity for distillates47 specifically serving the New Jersey, Pennsylvania, 

and New York markets. Also, Colonial Pipeline added an additional 100,000 b/d of gasoline and 

distillates capacity in early 201348 to meet demand on the northern portion of the line (Greensboro, NC 

to Linden, NJ).

In the U.S., there were 135 operating refineries, in which 131 were operating in the US with total

atmospheric crude oil distillation capacity (ACDU) of 19.0 million b/d as of January 1, 2020

49. The East 

Coast (PADD 1) has eight refineries, in which seven are currently operating, with 1.2 million b/d of 

atmospheric crude distillation capacity. The region has 502,500 b/d of fluid catalytic cracking (FCC) 

capacity. PADD 1 includes all states in New England, the Mid-Atlantic, and the South Atlantic and is 

subdivided into three sub-PADDs.

• PADD 1A – Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut

• PADD 1B – New York, Pennsylvania, New Jersey, Delaware, Maryland, District of Columbia

• PADD 1C – West Virginia, Virginia, North Carolina, South Carolina, Georgia, Florida

Supply dynamics for each of the three sub-PADDs vary. PADD 1A, which encompasses New England, 

has no refineries and relies on imports and transfers from other PADDs, primarily PADD 1B. PADD 1C, 

the South Atlantic, has one operating refinery and relies primarily on pipeline transfers and marine 

shipments from PADD 3 and imports. PADD 1B is supplied by a combination of refineries, transfers from 

other PADDs -- primarily from PADD 3 -- and imports50. As stated above, the majority of PADD 1B

refineries are located in New Jersey, Delaware and Pennsylvania, and are within 100 miles of the New 

York Harbor

46 http://www.eia.gov/analysis/petroleum/nerefining/update/pdf/neprodmkts.pdf

47 http://www.eia.gov/pressroom/presentations/sieminski_10102012.pdf

48 http://www.colpipe.com/home/news-media/press-releases/pressdetail?ID=7cb2e327-d0b3-6eb4-9c07-ff00009907dd

49 https://www.eia.gov/petroleum/refinerycapacity/

50 http://www.eia.gov/pressroom/testimonies/howard_03192012.pdf

38
area. These refineries are directly connected to the New York Harbor market by local pipelines and/or 

waterborne barges. A list of Northeast refineries is provided in Table 1.

Table 1 – Mid-Atlantic (PADD 1B) Refineries (Source: EIA)

Name State Owner Capacity Status

Delaware City 

Refinery Co LLC

Delaware City, 

DE

PBF Energy 

Co LLC 182,200 b/d Operational

Paulsboro Refining 

Co LLC Paulsboro, NJ PBF Energy 

Co LLC 160,000 b/d Operational51

Phillips 66 

Company Linden, NJ Phillips 66 

Company 258,500 b/d Operational

American Refining

Group Inc Bradford, PA

American Refining 

Group Inc 11,000 b/d Operational

Philadelphia Energy

Solutions

Philadelphia, 

PA Carlyle Group 335,000 b/d Idle

United Refining Co Warren, PA Red Apple 

Group Inc 65,000 b/d Operational

Monroe Energy LLC Trainer, PA Delta Airlines 

Inc 190,000 b/d Operational

III. Deliverable Supply Estimates

A. Refinery and Blender Production

In recent years, Northeast refineries supplied about 40% of gasoline (and 60% of the ULSD) consumed 

in the Northeast. Shipments from the U.S. Gulf Coast and imports supply the remainder of the market.52

The EIA provides gasoline production data for RBOB Gasoline that is produced by both refiners and 

blenders, under the category of “refiner and blender net production” as shown in Table 2 below. The 

majority of PADD 1 refineries are located in Delaware, New Jersey, and Pennsylvania, with direct 

connection to the New York Harbor market by pipelines and/or waterborne barges. In addition, the EIA’s

“refiner and blender net production” category includes RBOB produced by refiners, and also includes

blender production which relies on imported gasoline blending components.

Blenders are significant producers of RBOB gasoline, and the majority of RBOB blending components 

are sourced through imported gasoline blendstocks that enter via the New York Harbor. Typically, 

gasoline blenders are large trading companies that operate in the global market, such as Vitol, Glencore, 

and Trafigura. Since the blenders’ production of RBOB is sourced from imported gasoline blending 

components, these imported blending components are captured in the EIA’s category of “refinery and 

blender net production.” Consequently, the Exchange will include only the EIA’s “refinery and blender 

net production” category as the key component of New York Harbor supply and not include import data. 

Thus, to prevent potential double-counting of imported gasoline blending components, the Exchange 

will notuse imports in its deliverable supply analysis, but rather will utilize the EIA’s data for “refinery and 

blender net production”.

According to EIA data from 2018 through 2020, the three-year average of RBOB production by refiners

and blenders in PADD 1 was 1.20 million b/d, or 36.1 million barrels per month, as presented in Table 2

below. The RBOB gasoline that is produced in PADD 1 is in the vicinity of New York Harbor area, with 

direct connectivity to New York Harbor terminals, and the majority of this RBOB is transshipped and/or 

stored in New York Harbor terminals.

51 Paulsboro Refinery Reconfiguration and Optimization, https://investors.pbfenergy.com/news/2020/10-29-2020-103142029

52 http://www.eia.gov/pressroom/testimonies/howard_03192012.pdf

39
Table 2 – PADD 1 Production53 (Source: EIA)

RBOB Gasoline, in thousands b/d January 2018

– December 

2018

January 2019

– December 

2019

January 2020

– December 

2020

Average

Refinery and Blender Net Production 1,269 1,286 1,054 1,203

In conversations with market participants, it was determined that a portion of the Philadelphia refinery 

production is used to supply the Pennsylvania market via the Buckeye Laurel Pipeline. Based on EIA’s 

prime supplier sales data54, the Exchange estimates that the gasoline supplied to Pennsylvania was 

approximately 225,000 barrels per day for the three-year period of 2018 through 2020. Therefore, the 

Exchange reduced the total refinery and blender net production by 225,000 barrels per day to account 

for gasoline supplied to Pennsylvania directly from Philadelphia-area refineries. Consequently, the total 

refinery and blender net production available for the New York Harbor market is approximately 975,000

barrels per day (rounding down), which is equivalent to 29.3 million barrels per month.

Further, according to input from market participants, approximately 30% to 40% of RBOB production is 

committed to retail distribution networks, and the remaining portion is available for re-selling in the spot 

market. Therefore, at least 60% of PADD 1 production of RBOB would be available for re-selling in the 

New York Harbor spot market. Consequently, we estimate that approximately 17.6 million barrels per 

month of RBOB (60% of 29.3 million barrels per month) would be deliverable in New York Harbor.

B. Pipeline Flows and Net Receipts

The U.S. Gulf Coast, or PADD 3, refining capacity accounts for 50% of total US production of refined 

products and provides approximately 266,000 b/d of RBOB gasoline to PADD 1 via pipeline and 

tanker/barge shipments, as presented in Table 3 below. However, the majority of PADD 1 pipeline and 

tanker/barge receipts of RBOB from PADD 3 do not end up in the New York Harbor area as they are 

delivered at points further south of New York Harbor. According to market participants, only about 25% 

to 30% of PADD 1 gasoline receipts are delivered to the New York Harbor area. Therefore, using the 

more conservative 25% estimate for RBOB pipeline and tanker/barge shipments from PADD 3, the total

receipts from PADD 3 to the New York Harbor area accounts for approximately 66,500 b/d (25% of

266,000 b/d) or 2.0 million barrels per month.

Table 3 – RBOB Movements from PADD 3 into PADD 155 (Source: EIA)

December

2017

– November

2018

December

2018

– November

2019

December

2019

– November

2020

Average

RBOB Movements, in Barrels per 

Day 261 274 264 266

53 EIA, http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WGRRPP12&f=W

54 EIA Prime Supplier Sales Volumes by State, https://www.eia.gov/dnav/pet/pet_cons_prim_dcu_SPA_m.htm

55 EIA, Monthly Data in barrels per day, https://www.eia.gov/dnav/pet/pet_move_ptb_dc_R10-R30_mbbl_m.htm

40
C. Inventories of Gasoline in the New York Harbor Market

The New York Harbor area has petroleum bulk storage capacity of over 75 million barrels, making it the 

largest petroleum product hub in the country. The three-year average of gasoline stocks held in the

Central Atlantic region, or PADD 1B, including New York, New Jersey, and Pennsylvania is 

approximately 33.9 million barrels as seen in Table 4 below. According to market participants, the New 

York Harbor RBOB market accounts for 25% to 30% of the inventories reported in EIA’s PADD 1B 

inventory statistics. Using the more conservative estimate of 25% of PADD 1B inventories, the average 

stock level of gasoline is estimated to be about 8.5 million barrels in the New York Harbor area. Based 

on estimates from industry experts, we determined that the operational minimum levels for storage tanks

in the New York Harbor area are approximately 5% to 10%. Using the more conservative estimate of 

10%, we therefore estimate that approximately 850,000 barrels of the approximately 8.5 million barrels 

of stored gasoline in the New York Harbor area is used for operational purposes, leaving 7.6 million 

barrels available for spot month delivery from inventory.

Table 4 – Gasoline Stocks in PADD 1B56 (Source: EIA)

Inventory, in thousand barrels PADD 1B (Central Atlantic)

January 2018 – December 2018 33,508

January 2019 – December 2019 32,833

January 2020 – December 2020 35,260

Average 33,867

ANALYSIS OF DELIVERABLE SUPPLY

Based on the above analysis, the Exchange determined at this time to base its estimates of deliverable 

supply on the sum of:

A. Refinery and Blender Production = 17.6 million barrels

B. Pipeline flows to the delivery area = 2.0 million barrels

C. Storage levels in the delivery area = 7.6 million barrels

The Exchange estimates the monthly deliverable supply of RBOB gasoline to the New York Harbor to 

be approximately 27.2 million barrels, which is equivalent to 27,200 contracts per month (contract size

42,000 gallons or 1,000 barrels). The proposed spot month position limit for the New York Harbor RBOB 

Gasoline Futures Contract is 2,000 contracts or 7.4% of the estimated monthly deliverable supply.

56 http://www.eia.gov/dnav/pet/pet_stoc_wstk_dcu_r1y_w.htm

41
APPENDIX A

PADD 1, Refiner and Blender Net Production57

(Source: EIA, Monthly Averages based on Weekly Data)

(Thousand Barrels per Day)

Year Month Total

2018

Jan 1,144

Feb 1,207

Mar 1,235

Apr 1,267

May 1,291

Jun 1,302

Jul 1,309

Aug 1,315

Sep 1,255

Oct 1,299

Nov 1,287

Dec 1,314

2019

Jan 1,226

Feb 1,260

Mar 1,275

Apr 1,283

May 1,308

Jun 1,329

Jul 1,301

Aug 1,313

Sep 1,271

Oct 1,276

Nov 1,297

Dec 1,288

2020

Jan 1,206

Feb 1,244

Mar 1,090

Apr 627

May 807

Jun 1,014

Jul 1,124

Aug 1,174

Sep 1,127

Oct 1,112

Nov 1,086

Dec 1,042

57 http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WGRRPP12&f=W

42
PADD 1B (Central Atlantic) Total Gasoline Stocks 58

(Source: EIA, Monthly Averages based on Weekly Data)

(Thousand Barrels)

Year Month PADD 1B (Central Atlantic) Total 

Gasoline Stocks

2018

Jan 30,745

Feb 34,686

Mar 32,363

Apr 33,428

May 32,655

Jun 33,175

Jul 33,263

Aug 32,270

Sep 35,632

Oct 35,897

Nov 33,207

Dec 34,770

2019

Jan 34,482

Feb 38,273

Mar 36,135

Apr 32,586

May 32,143

Jun 31,946

Jul 29,075

Aug 31,288

Sep 32,854

Oct 31,577

Nov 30,399

Dec 33,239

2020

Jan 35,895

Feb 36,905

Mar 36,791

Apr 39,447

May 38,943

Jun 39,473

Jul 35,847

Aug 33,297

Sep 30,883

Oct 30,049

Nov 30,621

Dec 34,965

58

 http://www.eia.gov/dnav/pet/pet_stoc_wstk_dcu_r1y_w.htm

43