Dubai exchange sees record trade in crude futures

05 September 2007 15:31 [Source: ICIS news]

SINGAPORE (ICIS news)--The Dubai Mercantile Exchange (DME) announced on Wednesday that trade volumes for all contracts including those for benchmark Oman crude oil futures hit a new record level yesterday.

Tuesday’s contracts totalled 8,036, compared with the previous record of 6,250 recorded on 7 June, a few days after the launch of the exchange.

Trade on the DME had eased off somewhat during July and August before recovering in recent days, the recovery aided by the first physical delivery of Oman crude oil via the exchange.

Some 4,000 August Oman futures contracts, equivalent to some 4m barrels of crude, went to physical delivery after the first expiry of the new futures contract on 29 June.

The physically deliverable DME Oman futures contract was launched in order to increase price transparency and provide a better risk management tool in the Middle East crude market. This is seen as a key market for Asia, which imports more than two-thirds of its crude oil from the region.

Following the launch of the DME, the Oman and Dubai governments adopted a forward pricing mechanism to calculate the official selling price (OSP) for their crude. It is based on the arithmetic average of the daily settlement prices for DME Oman futures over the calendar month.

The August OSP for Oman of $66.05/bbl was the first calculated using the new mechanism. It represents the arithmetic average of the daily settlement prices over the month of June for the August DME Oman futures.

At the end of August, the October Oman OSP was calculated at $68.34/bbl.

By: James Dennis
+65 6780 4359

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