Beginnings of a new benchmark?

A single oil trade usually isn’t that big a deal, but the first contract via CME Group’s new sour crude futures contract is worth noting:

“On Monday, CME’s New York Mercantile Exchange and competing exchange operator IntercontinentalExchange Inc. (ICE) both introduced contracts meant to complement the Argus Sour Crude Index, a price assessment recently adopted by Saudi Arabia for oil sold in the U.S.
The new contracts track a lower-quality oil than the widely traded light, sweet crude futures, which act as a global benchmark to set crude prices. The move by the Saudis has some market participants predicting that Argus-linked derivatives could eventually grow into a new pricing benchmark.
That process is expected to be slow, however, with many traders wary of entering a market with little or no liquidity. CME’s contract and ICE’s two offerings saw no activity in their first day.
The first trade was for 50 contracts for April 2010 delivery on Nymex. The contract is currently priced at $76.50 a barrel, about $2 below Nymex’s April light, sweet crude contract.

CME hosted a bunch of Houston reporters for breakfast last week (including me) where the new sour crude contract was discussed.
“This will do something. Does it become a blockbuster starting out? Those usually take years to develop,” said Richard Redding, CME managing director of products and services, in a Reuters article from the meeting.
For example, CME started trading a new set of cash settled contracts in late November based on the Argus Sour Crude Index, but there has been no trading in them so far (as one reporter at the breakfast kept reminding the CME folks).
That new index — based on a basket of U.S. sours from Gulf of Mexico fields including Mars, Poseidon and Southern Green Canyon — was launched after Saudi Arabia said in October its January deliveries would be priced off the Argus index rather than Platts’ West Texas Intermediate price, as it had done since 1994.
WTI has become increasingly erratic compared to other crudes, the Saudi’s complained, largely because storage levels at Cushing, Okla., where WTI is delivered into the American pipeline system, has been reflective of domestic issues rather than broader international demand.