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China inches closer to launching its first crude futures contract

Gasoil News - Published on Wed, 17 Jan 2018

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Platts reported that China is inching closer to launching its first crude oil futures contract but it will happen only after the Lunar New Year holiday which ends on February 23, a government source with knowledge of the matter said. “Basically, there is no problem [for the crude contract] to get approval from the State Council,” the source said, but added that it was unlikely to be kicked off before the Lunar New Year.

Approval from the State Council is the final hurdle in the launch of the medium sour crude futures contract.

A source with host platform Shanghai International Energy Exchange said that once it is approved, the exchange will release the deliverable crude grades, differentials of the deliverable grades against the standard contract and the delivery venue.

A futures trader in South China said that “The exchange should officially release these details two weeks ahead of the launch in order to give enough time to inform the potential players.”

Given this schedule, analysts expect the earliest launch date as most likely in late March after China’s most important annual political events in early to middle March - the National People’s Congress and the Chinese People’s Political Consultative Conference.

INE’s parent company, the Shanghai Futures Exchange, has been developing the medium sour crude futures contract since 2009, with some progress seen between 2012 and the third quarter of 2015. The launch of the contract has been delayed several times.

Although, it had been widely expected to start up in 2017, INE only announced the basic terms and general trading rules while accepting more members and carrying out several trial runs for the system.

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Posted By : Rabi Wangkhem on Wed, 17 Jan 2018
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