Dubai to launch two new futures contracts

06 March 2008 14:27  [Source: ICIS news]

SINGAPORE (ICIS news)--The Dubai Mercantile Exchange (DME) addressed traders in Singapore on Thursday on its plans to launch two new financially settled futures contracts for Oman and Brent crude.

The move follows the success of its physically deliverable Oman crude oil futures contract, which was launched last June

The new contracts were developed in response to demands from the industry for simplified trading mechanisms linking both the physical and financial markets and also the sweet and sour crude markets in different regions, said DME CEO Gary King.

King added that the new contracts will complement the existing DME Oman crude oil futures contract which was introduced to improve liquidity and price transparency in Middle East crude.

No firm date was given for the launch of the new financial Oman and Brent contracts as the DME is awaiting regulatory approval.

However, the planned DME Oman crude oil financial contract will be cash-settled against the corresponding DME Oman crude oil futures contract while the DME Brent crude oil financial contract will be cash-settled using ICE Brent crude futures contract prices.

King said that he was very pleased with the development of the Oman crude oil futures contract. Since its launch eight months, more than 270m bbl of crude had traded on the exchange with daily trading volumes averaging around 2,000 lots - equivalent to around 2m bbl/day.

The two national oil companies of Oman and Dubai already price off the exchange price and more than 70 memberships of the exchange have been sold, King added.

The Oman contract was the first to provide physical delivery of Middle East sour crude and King noted increasing volume of open interest on the exchange going through to physical delivery.

By: James Dennis
+65 6780 4359

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