On March 26 China schedules to start its crude futures contract, two people in the know said today, an action, which is likely to bring changes to the prices of the commodity. Several years of attempts by China to establish the first Asian oil futures benchmark will finally give results.
The purpose of this is to give more power to the number one oil consumer in the world in pricing crude oil in Asia. The Shanghai International Energy Exchange could possibly receive a share of several trillions US dollars on a yearly basis in oil futures trading, as it is to be the operator of the new contract.
The two people, who provided the information, preferred to stay anonymous as they were not given authorization to make statements. The Shanghai Futures Exchange together with the mentioned Energy Exchange, which is a division of the former, refused to speak on the issue.
The globe’s biggest consumption of oil takes place in Asia, and China believes their derivative crude contract will help to improve the representation of local market conditions. The bulk of crude trades are based on US WTI and UK Brent and executed predominantly on NYMEX and the Intercontinental Exchange.