Oman oil contracts pass 1m mark

More than a million futures contracts for Oman crude oil have changed hands since the contract was launched in Dubai two years ago as the exchange that originated it seeks to create a benchmark for global traders. Announcing the development, the Dubai Mercantile Exchange (DME) said it reflected the growing liquidity of its futures "flagship". DME Oman had traded 1,000,174 futures contracts from its launch in June 2007 until the close of trading last Friday, representing more than 1 billion barrels of crude, the exchange reported.

"This is a testament to the overwhelming support of our customers and a growing recognition that DME Oman provides the most efficient price discovery and risk management tool to participants in the rapidly growing East of Suez markets," said Thomas Leaver, the chief executive of the DME. Trading in the Oman contract has increased markedly this year and reached a record daily average of 2,624 transactions last month, an improvement from volumes that often fell below 1,000 per day at the start of the year. Trading activity rose after the Dubai Government decided last June to link the price of its crude exports to the contract settlement price. Volumes also benefited from the contract's listing on the CME commodities exchange in the US last February.

The "significant milestone" reflected growing acceptance of the DME Oman contract among "key energy traders and hedgers" in the Asia Pacific region, the physical market for most of the crude underlying the contract, said Craig Donohue, the chief executive of CME Group, which owns that exchange. DME Oman was the largest physically delivered crude oil contract in the world, with monthly deliveries recently averaging 10 million barrels after reaching a record 11.6 million barrels in September, the Dubai exchange said.

The contract had struggled before this past summer to achieve sufficient trading volumes to serves as a realistic benchmark, experts and oil traders said. @Email:tcarlisle@thenational.ae