DME to launch two new future contracts
Posted: 26 February 2008
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Dubai Mercantile Exchange (DME) is launching two new financially-settled contracts for Brent and Oman crude oil, the futures energy exchange has announced.
This follows the successful launch of the exchange’s benchmark Oman Crude Oil Futures Contract last year amid record volumes and open interest in January, the exchange said.
“We will launch financially settled contracts for Brent crude and Oman crude in the very near future,” Gary King, chief executive of DME, said at a seminar in London. “These two new contracts were designed after extensive consultation with our global customers.”
When the contracts are launched, traders will have the essential tools for making a commonly traded over-the-counter transaction, the spread between two sweet and sour crude oil benchmarks. Both contracts will be traded in units of 1,000 US barrels.
DME is the first futures market in the Middle East, backed by the New York Mercantile Exchange and the governments of Oman and Dubai, launched a physically settled Oman sour crude contract on June 1 last year in an effort to provide a futures link to crude supply from the Middle East.
“While they are delighted that our Oman Crude Oil Futures Contract has established itself as the global benchmark for Middle East sour crude, they also told us that they wanted to be able to trade multiple financially settled crude oil benchmarks on one common platform yet still linked to the validity of pricing of the underlying physical contract.
About 268,000 contracts were traded since its launch and about 193,000 barrels per day of Oman crude were delivered for January.
“We are confident that these new contracts will prove as successful as our flagship physically delivered Oman Crude Oil Futures Contract and greatly add to overall liquidity and price transparency.”
The DME’s new Brent contract will be cash-settled against ICE’s Brent Crude Futures Contract, while its new Oman contract will be cash-settled against the DME’s benchmark Oman Crude Oil Futures Contract.
In addition to being cleared at the NYMEX Clearinghouse, the new contracts will also be available for block trading, recently introduced by the DME, Exchange for Physical (EFP) and Exchange for Swap (EFS) trades, using NYMEX’s ClearPort® Clearing.
The DME also announced that it will delist its Brent–Oman Financial Spread Contract (QN) and WTI–Oman Financial Spread Contract (QW) upon launch of the new contracts.
DME’s listing of any new contracts is subject to approval by the Dubai Financial Services Authority. All clearing and settlement services to be provided by the New York Mercantile Exchange, Inc for new contracts are also subject to final regulatory approval, the exchange said.
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