SUBMISSION COVER SHEET

IMPORTANT: Check box if Confidential Treatment is requested 

Registered Entity Identifier Code (optional): 23-207 (2 of 10)

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): 07/13/23 Filing Description: Initial Listing of the Crude Oil 

Monday and Wednesday Weekly Option 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: 

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

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Christopher Bowen 

Managing Director and Chief Regulatory Counsel

Legal Department

July 13, 2023

VIA ELECTRONIC PORTAL

Mr. Christopher J. Kirkpatrick

Office of the Secretariat

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, N.W.

Washington, DC 20581

Re: CFTC Regulation 40.2(a) Certification. Initial Listing of the Crude Oil Monday and 

Wednesday Weekly Option Contracts.

NYMEX Submission No. 23-207 (2 of 10)

Dear Mr. Kirkpatrick:

New York Mercantile Exchange, Inc. (“NYMEX” or “Exchange”) is certifying to the Commodity Futures 

Trading Commission (“CFTC” or “Commission”) the initial listing of the Crude Oil Monday and Wednesday 

Weekly Option contracts (the “Contracts”) for trading on the CME Globex electronic trading platform (“CME 

Globex”) and for submission for clearing via CME ClearPort, effective Sunday, July 30, 2023 for trade date 

Monday, July 31, 2023, as more specifically described below in Table 1 below.

Table 1.

Contract Title Crude Oil Monday Weekly Option Crude Oil Wednesday Weekly Option

Commodity Code ML1, ML2, ML3, ML4, ML5 WL1, WL2, WL3, WL4, WL5

Rulebook Chapter 1011

Underlying Futures 

Contract / 

Commodity Code

Light Sweet Crude Oil Futures / CL

Contract Size 1,000 barrels

Price Quotation US dollars and cents per barrel

Minimum Price 

Fluctuation $0.01

Value per Tick $10.00 

Option Exercise 

Style American - exercises into the underlying futures

Listing Schedule Weekly contracts listed for 4 weeks

Initial Listing ML1Q23, ML2Q23, ML3Q23, ML4Q23 WL2Q23, WL3Q23, WL4Q23, WL5Q23

Strike Price 

Increments

Minimum 20 strikes at $0.25 per barrel increment above and below the at-themoney strike then 10 strikes at $0.50 per barrel increment on the nearest 0.50 

interval above and below the highest and lowest $0.25 per barrel increment 

strikes, then 10 strikes at $2.50 per barrel increment on the nearest 2.50 interval 

above and below the highest and lowest $0.50 per barrel increment strikes plus 

dynamic strikes at $0.25 per barrel increment.

Block Trade 

Minimum 

Threshold

10 contracts - subject to a 15-minute reporting window
300 Vesey Street New York, NY 10282 T 212 299 2200 F 212 301 4645 christopher.bowen@cmegroup.com cmegroup.com

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Trading and 

Clearing Hours

CME Globex Pre-Open: Sunday 4:00 p.m. - 5:00 p.m. Central Time / CT 

Monday - Thursday 4:45 p.m. - 5:00 p.m. CT

CME Globex: Sunday - Friday 5:00 p.m. CT with a daily maintenance period 

from 4:00 p.m. - 5:00 p.m. CT

CME ClearPort: Sunday - Friday 5:00 p.m. - 4:00 p.m. CT with no reporting 

Monday - Thursday from 4:00 p.m. - 5:00 p.m. CT

The Contracts are referenced contracts that exercise into the core referenced Light Sweet Crude Oil Futures

contract (Commodity Code: CL, Rulebook Chapter 200). The Contracts expire prior to the spot month limits 

taking effect for the corresponding core referenced Light Sweet Crude Oil Futures contract.

In order to provide a distinction between the new and existing weekly option contracts, the Exchange is 

concurrently amending the contract title of the existing Crude Oil Weekly Option contract to specify the 

currently listed Friday expiry as detailed in Table 2. below. Also at this time, the Exchange will implement 

administrative amendments to Rule 1011101. (“Option Characteristics”) of NYMEX Chapter 1011 (“Crude Oil 

Weekly Option”) as provided in Exhibit A attached below in blackline format. The Exchange is concurrently 

certifying these administrative amendments to the existing Friday weekly option contract also effective on 

July 31, 2023 via NYMEX Submission No. 23-302 also dated July 13, 2023.

Table 2.

Current Contract Title Amended Contract Title Rulebook 

Chapter Commodity Code

Crude Oil Weekly 

Option Crude Oil Friday Weekly Option 1011 LO1, LO2, LO3, LO4, LO5

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

Commodity Exchange Act (“CEA” or “Act”) and identified that the Contracts may have some bearing on the 

following Core Principles:

• Compliance with Rules: Trading in the Contracts will be subject to the rules in Rulebook Chapter 

4 which includes prohibitions against fraudulent, noncompetitive, unfair and abusive practices. 

Additionally, trading in the Contracts will also be subject to the full panoply of trade practice rules, 

the majority of which are contained in Chapter 5 and Chapter 8 of the Rulebook. As with all 

products listed for trading on one of CME Group’s designated contract markets, activity in the new 

product will be subject to extensive monitoring and surveillance by CME Group’s Market Regulation

Department. The Market Regulation Department has the authority to exercise its investigatory and 

enforcement power where potential rule violations are identified.

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

manipulation and are based on the deep liquidity of the underlying futures contracts.

• Prevention of Market Disruption: Trading in the Contracts will be subject to the Rules of NYMEX

which include prohibitions on manipulation, price distortion and disruptions of the delivery or cashsettlement process. As with all products listed for trading on one of CME Group’s designated 

contract markets, activity in the new products will be subject to extensive monitoring and 

surveillance by CME Group’s Market Regulation Department.

• 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 Exchange will publish on its website information 

regarding contract specifications, terms and conditions, as well as daily trading volume, open 

interest and price information for the Contracts.
300 Vesey Street New York, NY 10282 T 212 299 2200 F 212 301 4645 christopher.bowen@cmegroup.com cmegroup.com

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• Daily Publication of Trading Information: The Exchange will publish information contract trading 

volumes, open interest levels, and price information daily on its website and through quote vendors 

for the Contracts.

• Execution of Transactions: The Contracts will be listed for trading on the CME Globex electronic 

trading and for clearing through CME ClearPort. The CME Globex trading venue provides for 

competitive and open execution of transactions. CME Globex affords the benefits of reliability and 

global connectivity.

• Trade Information: All required trade information for the Contracts will be included in the audit trail 

and is sufficient for the Market Regulation Department to monitor for market abuse.

• Financial Integrity of Contract: The Contracts will be cleared by the CME Clearing House which 

is a registered derivatives clearing organization with the Commission and is subject to all 

Commission regulations related thereto.

• Protection of Market Participants: NYMEX Rulebook Chapters 4 and 5 contain multiple 

prohibitions precluding intermediaries from disadvantaging their customers. These rules apply to 

trading on all of the Exchange’s competitive trading venues and will be applicable to transactions 

in these Contracts.

• Disciplinary Procedures: Chapter 4 of the Rulebook contains provisions that allow the Exchange 

to discipline, suspend or expel members or market participants that violate the rules. Trading in 

these Contracts will be subject to Chapter 4, and the Market Regulation Department has the 

authority to exercise its enforcement power in the event rule violations in these Contracts are 

identified.

• Dispute Resolution: Disputes with respect to trading in the Contracts will be subject to the 

arbitration provisions set forth in Chapter 6 of the Rulebook. The rules in Chapter 6 allow all 

nonmembers to submit a claim for financial losses resulting from transactions on the Exchange to 

arbitration. A member named as a respondent in a claim submitted by a nonmember is required 

to participate in the arbitration pursuant to the rules in Chapter 6. Additionally, the Exchange 

requires that members resolve all disputes concerning transactions on the Exchange via arbitration.

Pursuant to Section 5c(c) of the Act and CFTC Regulations 40.2(a), the Exchange hereby certifies that the 

Contracts comply with the Act, including regulations under the Act. There were no substantive opposing 

views to the proposal.

The Exchange certifies that this submission has been concurrently posted on the CME Group website at

http://www.cmegroup.com/market-regulation/rule-filings.html.
300 Vesey Street New York, NY 10282 T 212 299 2200 F 212 301 4645 christopher.bowen@cmegroup.com cmegroup.com

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Should you have any questions concerning the above, please contact the undersigned at (212) 299-2200 

or via e-mail at CMEGSubmissionInquiry@cmegroup.com.

Sincerely,

/s/ Christopher Bowen

Managing Director and Chief Regulatory Counsel

Attachments: Exhibit A: NYMEX Rulebook Chapter 1011

Exhibit B: Position Limits, Position Accountability and Reportable Level Table in Chapter 

 5 of the NYMEX Rulebook (attached under separate cover)

Exhibit C: Exchange Fees

Exhibit D: NYMEX Rule 588.H. – (“Globex Non-Reviewable Trading Ranges”) Table

Exhibit E: NYMEX Rule 589. – Special Price Fluctuation Limits and Daily Price Limits 

 Table

Exhibit F: NYMEX Rule 300.20. – Strike Price Listing and Exercise Procedures Table

Exhibit G: Cash Market Overview and Analysis of Deliverable Supply
5

Exhibit A

NYMEX Rulebook

(additions underscored; deletions struck through)

Chapter 1011

Crude Oil Weekly Option 

1011100. SCOPE OF CHAPTER

This chapter is limited in application to weekly put and call options on the Light Sweet Crude Oil 

Futures contract. In addition to the rules of this chapter, transactions in the Crude Oil Monday 

Weekly Option, the Crude Oil Wednesday Weekly Option, and the Crude Oil Friday Weekly 

Option contracts shall be subject to the general rules of the Exchange insofar as applicable.

1011101. OPTION CHARACTERISTICS

***

1011101.A. Trading Schedule 

The hours of trading for this contract these contracts shall be determined by the 

Exchange.

***

1011101.E. Termination of Trading

Crude Oil Monday Weekly Option

Options will expire at the close of trading on a Monday schedule. If such Monday is an 

Exchange holiday, the weekly option shall terminate on the first Business Day immediately 

following the Monday.

Crude Oil Wednesday Weekly Option

Options will expire at the close of trading on a Wednesday schedule. If such Wednesday is 

an Exchange holiday, the weekly option shall terminate on the first Business Day immediately 

following the Wednesday.

Crude Oil Friday Weekly Option

Options will expire at the close of trading on a Friday schedule. For the first (1st) weekly option of the 

month, if the first If such Friday of the listing is an scheduled Exchange holiday, the Crude Oil Weekly 

Option shall terminate on the first Business Day immediately preceding the Friday.

For the second (2nd) weekly option of the month, if the second Friday of the listing is a scheduled 

Exchange holiday, the Crude Oil Weekly Option shall terminate on the first Business Day immediately 

preceding the Friday.

For the third (3rd) weekly option of the listing, if the third Friday of the listing is a scheduled Exchange

holiday, the Crude Oil Weekly Option shall terminate on the first Business Day immediately preceding 

the Friday.

For the fourth (4th) weekly option of the listing, if the fourth Friday of the listing is a scheduled 

Exchange.

holiday, the Crude Oil Weekly Option shall terminate on the first Business Day immediately preceding 

the Friday.

[Remainder of chapter is unchanged.]
6

Exhibit B

NYMEX Rulebook

Chapter 5

(“Trading Qualifications and Practices”)

Position Limits, Position Accountability and Reportable Level Table 

(attached under separate cover)

Exhibit C

Exchange Fees

Member NonMember

International 

Incentive 

Programs

(IIP/IVIP)

CME Globex $0.70 $1.50 $0.90 

Block $1.85 $2.65 

EFR/EOO $1.75 $2.55 

Processing Fees

House 

Account

Customer 

Account

Option Exercise/Assignment Notice $0.40 $0.85 

Fee

Facilitation Fee $0.60 

Give-Up Surcharge $0.05 

Position Adjustment/Position 

Transfer $0.10 

Exhibit D

NYMEX Rulebook

Chapter 5

(“Trading Qualifications and Practices”)

Rule 588.H. (“Globex Non-Reviewable Trading Ranges”) Table

Metals Options Globex Symbol Globex Non-Reviewable Ranges 

(NRR)

Crude Oil Monday Weekly Option ML1-5

The greater of the following: 

 •Delta multiplied by the underlying 

futures non-reviewable range

 •20% of premium up to 1⁄4 of the 

underlying futures non-reviewable 

range

 •2 ticks

Crude Oil Wednesday Weekly Option WL1-5
7

Exhibit E

NYMEX Rulebook

Chapter 5

(“Trading Qualifications and Practices”)

Rule 589. Special Price Fluctuation Limits and Daily Price Limits Table 

Product Rulebook 

Chapter

Commodity 

Code Primary/Associated Associated With

Dynamically 

Calculated 

Variant

Daily Price 

Limit

Crude Oil

Monday 

Weekly

Option

1011 ML1, ML2, ML3, 

ML4, ML5 Associated CL

Crude Oil

Wednesday 

Weekly

Option

1011 WL1, WL2, 

WL3, WL4, WL5 Associated CL
8

Exhibit F

NYMEX Rulebook

Chapter 300

(“Options Contracts”)

Rule 300.20. - Strike Price Listing and Exercise Procedure Table
9

Exhibit G

Cash Market Overview and Analysis of Deliverable Supply

Appendix C to part 38 of the 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.”

The Crude Oil Monday Weekly Option and Crude Oil Wednesday Weekly Option contracts (the “Contracts”) 

are referenced contracts that exercise into the core referenced Light Sweet Crude Oil Futures contract

(Commodity Code: CL, Rulebook Chapter 200). The Contracts expire prior to the spot month limits taking 

effect for the corresponding core referenced Light Sweet Crude Oil Futures contract.

In estimating deliverable supply for the underlying Light Sweet Crude Oil Futures, the 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. In its guidance on estimating deliverable supply, the Commodity Futures Trading Commission 

(“CFTC” or “Commission”) states:

In general, the term “deliverable supply” means the quantity of the commodity meeting a 

derivative 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. Typically, deliverable supply 

reflects the quantity of the commodity that potentially could be made available for sale on 

a spot basis at current prices at the contract’s delivery points. For a non-financial physicaldelivery commodity contract, this estimate might represent product which is in storage at 

the delivery point(s) specified in the futures contract or can be moved economically into or 

through such points consistent with the delivery procedures set forth in the contract and 

which is available for sale on a spot basis within the marketing channels that normally are 

tributary to the delivery point(s).1 

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. 

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 
10

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.

A. 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.

B. 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 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. Three of the storage facilities — Enterprise, Enbridge, 

and Plains — and their pipeline manifolds are the core of the Cushing physical delivery mechanism.2 

Physical volumes delivered against the Light Sweet Crude Oil Futures contract within the Enterprise, 

Enbridge, and Plains 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 

2 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, with Plains added as a delivery option in February 2022. Plains and Enbridge account for about 

60% of the storage available at Cushing. 
11

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. Firstsales 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. Endusers, 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 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.3

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.4 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 middleman-firms 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.

3 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).

4 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.
12

• 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 re-sold 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 resale, 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 March 2020 through February 2023, the average production of crude oil available 

in the eight states was approximately 8.5 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 4.25 million barrels per day. The 4.25 million 

barrels per day of crude oil production is equivalent to approximately 127.5 million barrels per month, or 

127,500 futures contracts equivalents (contract size: 1,000 barrels).

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 March 2020 through February 2023. The data show that 

production has been rising. 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 94.2 million barrels of storage 

capacity in the Cushing area.

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.5 On a 30-day monthly basis, actual flows of Domestic Light Sweet 

5 The sources were various pipeline operators and other industry sources.
13

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.6 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 March 2022, EIA reported that shell storage capacity at Cushing was 94.235 million barrels and 

working storage capacity was 78.45 million barrels.7 Currently, there is substantial excess working capacity 

at Cushing (approximately 45 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 84.9% average underlying the EIA estimates).

Table 5 below provides monthly averages of weekly Cushing stocks for the inventory period beginning May 

2020 through April 21, 2023 (“the inventory period”) as published by the EIA. For the three-year average 

over the inventory period, stocks averaged 38.101 million barrels and on a weekly basis ranged from about 

22 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 inventory period, the monthly average Domestic Light Sweet 

Common Stream Crude Oil stored at Cushing was approximately 22.86 million barrels or 22,860 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.8 

This converts into discounting an estimated 1.54 million barrels of Domestic Light Sweet crude oil based 

on the three-year average storage level (or 1,540 contract equivalents). In applying a discount of 6.75% to 

6 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.

7 https://www.eia.gov/petroleum/storagecapacity/storagecapacity.xlsx - Table 2. 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 We have been advised that, for older tanks, the operational minimum is 9% and, for newer tanks, it is 4.5%. Our 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.
14

account for operational minimums, average monthly Domestic Light Sweet Common Stream Crude Oil for 

the inventory period is further reduced to approximately 21,318 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 inventory 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 19,318 contract 

equivalents. 

Analysis of WTI Cushing Deliverable Supply

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

supply on the sum of:

• Storage: 19,318 contract equivalents (which represents the average monthly inventory for the 

May 2020 – April 2023 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, 56,818 contract 

equivalents. Additionally, and as noted in the above analysis, the Exchange shall apply a 10% haircut to 

the sum of inventory storage and inflows into Cushing in order to discount segregated barrels that may be 

designated for processing by end-user refiners and typically not available for re-sale in the Cushing market. 

Therefore, after applying the 10% haircut, the Exchange has determined the estimated deliverable supply 

available for delivery against the Light Sweet Crude Oil Futures contract at approximately 51,136 futures 

contract equivalents per month. 

Analysis of Spot-Month Position Limits

For the purposes of calculating compliance with position limits, the Contracts will aggregate into the Light 

Sweet Crude Oil Futures contract (Commodity Code: CL). Because the Contracts expire into the Light 

Sweet Crude Oil Futures contract prior to the spot-month period, spot-month limits are not applicable to the 

Contracts.

 

Based on the prior analysis for deliverable supply for WTI Cushing, the current spot month position limit for 

Light Sweet Crude Oil Futures of 6,000 contracts represents 11.7% of the total estimated monthly 

deliverable supply. 
15

Table 1

U.S. Crude Oil Production9

For Eight States that Supply Cushing, Oklahoma

(in Thousands of Barrels per Day)

Table 2 

Crude Oil Flows to Cushing (as of December 2020)

(Barrels/Day)10

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

9 As of 2/1/23: 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

10 Sources: pipeline operators and other industry sources. 
16

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)

(Barrels/Day)11

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

Table 4

Crude Oil Flows to Cushing (as of March 2015)

(Barrels/Day)12

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)

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

12 Sources: Plains All American Pipeline Company, JSK consulting, and other industry sources. 
17

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
18

Table 5

Cushing Storage13

Monthly Average of Weekly EIA Stocks Data

(in Thousand Barrels)

13 http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W_EPC0_SAX_YCUOK_MBBL&f=W as of 4/21/2023