Difference between revisions of "Middle East crude oil futures"

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There have been multiple efforts to establish a third global benchmark for oil prices using Middle East crude alongside the established [[West Texas Intermediate]] and [[Brent crude]] contract specifications. The [[IntercontinentalExchange]] and the [[New York Mercantile Exchange]], through its investment in the [[Dubai Mercantile Exchange]], are currently embroiled in competition to secure this role through competing futures contracts launched in 2007.
There have been multiple efforts to establish a third global benchmark for oil prices using Middle East crude alongside the established [[West Texas Intermediate]] and [[Brent crude]] contract specifications<ref>{{cite web|url= http://www.reuters.com/article/companyNewsAndPR/idUSL1743182720070517|org=Reuters|name=Factbox|date=December 18, 2007}}</ref>. The [[IntercontinentalExchange]] and the [[New York Mercantile Exchange]], through its investment in the [[Dubai Mercantile Exchange]], are currently embroiled in competition to secure this role through competing futures contracts launched in 2007.


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== Background ==
== Background ==
The demand for a third benchmark to underpin futures contracts reflects the reference of both the WTI and Brent prices to sweet crude, while the bulk of Middle East exports are sour crude with a higher sulfur content.
The demand for a third benchmark to underpin futures contracts reflects the reference of both the WTI and Brent prices to sweet crude, while the bulk of Middle East exports are sour crude with a higher sulfur content. The subsequent "mispricing" of Middle East oil has spawned a number of unsuccessful efforts to launch new futures based on locally-derived prices.
 
The first attempt was by the [[Singapore International Monetary Exchange]] (Simex) in June 1990, but the contract based on Dubai pricing was terminated in February 1992. The [[International Petroleum Exchange]], now part of the [[IntercontinentalExchange]] followed with its own Dubai-based contract in July 1990, just before the start of the first Gulf war, and trading ended in May 1991 before termination in November 1992.
 
The Nymex launched a contract in April 2001 based on the Oman/Dubai crude price, but traded for only two days and was terminated in April 2001.
In April 2002, the [[Singapore Exchange]] and the [[Tokyo Commodity Exchange]] (Tocom) announced plans to cooperate on the launch of the Middle Eastern Crude Oil (MECO) futures on SGX<ref>{{cite web}url=http://www.tocom.or.jp/news/2002/20020403.html|org=Tokyo Commodity Exchange|name=MoU|date=December 18, 2007.
The Tocom had an existing Middle East crude oil futures contract priced in yen in a locals-only market, based on the average Oman/Dubai crude price published by Platts.  The Singapore contract was launched in November 2002, but failed to gain liquidity.


The subsequent "mispricing" of Middle East oil has spawned a number of unsuccessful efforts to launch new futures based on locally-derived prices.


Nymex, in 2000, launched a Middle East sour crude oil futures contract in Singapore but failed to attract liquidity and folded after about 13 months. The Singapore Exchange and the Tokyo Commodities Exchange followed with a similar attempt in 2002 but gave up after just more than a year.


== Nymex versus ICE ==
== Nymex versus ICE ==
== References ==
== References ==
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