Murban crude futures register record trading volumes

The equivalent of 14.4 million barrels of Murban crude were traded on the Ifad exchange on Wednesday

Contracts traded at Ifad will be cleared at Ice Clear Europe alongside global benchmarks such as Brent, West Texas Intermediate, Ice Platts Dubai and Ice Low Sulphur Gasoil. Courtesy Adnoc

Murban crude futures, which began trading on March 29, registered the highest volume of trade on Wednesday, with a record 14,419 contracts exchanged.

The contracts are equivalent to 1,000 barrels each, and the volumes traded on Tuesday equate to nearly 14.4 million barrels of Murban crude, according to the Ice Futures Abu Dhabi exchange, on which the contracts trade.

Murban futures for June delivery were down 1.16 per cent at $61.18 per barrel at 6.58pm UAE time. Brent, the international marker, was down 0.5 per cent at $62.87 per barrel.

Adnoc switched from a retroactive pricing model to forward pricing last year as it sought to create a futures contract that allows oil from the emirate to become a freely-traded global commodity, filling a void in the trading and pricing of crude from the Middle East, which is the biggest supplier to global energy markets.

"The scale of the response from the market to the launch of Murban futures is both encouraging and validating,” said Jamal Oulhadj, president of Ifad.

Murban, a premium grade, is a light, sweet crude that is popular among Asian buyers, who increasingly dominate the global trade in oil. One million barrels per day of Murban crude are available for export. The UAE, which accounts for 4.2 per cent of global crude output, has the capacity to produce 2 million bpd of Murban.

A total of 38,712 contracts priced against Murban have traded on the Ifad exchange located at the Abu Dhabi Global Market since its launch.

Eighteen Murban-related cash settled derivatives and inter-commodity spreads were also launched alongside the futures contracts, offering a broad range of ways to trade and hedge against Abu Dhabi's flagship grade.

"The energy industry needed the ability to hedge forward price risk for Murban crude and what we are seeing is participants from across both the physical and financial sides of the market coming together to form two-way pricing every day and contribute to the price formation process of Murban crude oil," said Mr Oulhadj.

Of the contracts traded so far, 4,510 are Murban-related cash settled derivatives with 38 firms having traded on the exchange since the launch.

The futures are open for trade 24 hours a day on Mondays and 22 hours a day from Tuesdays to Fridays. Investors from jurisdictions including the ADGM, the US, Singapore, UK, Switzerland, the Netherlands, France, Norway, Australia, Japan and South Korea are able to trade on the exchange.

Abu Dhabi National Oil Company set up the Ice Futures Abu Dhabi exchange with Intercontinental Exchange, the parent company of the New York Stock Exchange, at Abu Dhabi Global Market. Ifad is supported by several of Adnoc's trading and upstream partners. The Abu Dhabi producer is ensuring greater transparency in the trade of Murban by allowing market participants to have an insight into available volumes for the grade for 12 months.

Contracts traded at the Abu Dhabi exchange will be cleared at Ice Clear Europe alongside global benchmarks such as Brent, West Texas Intermediate, Ice Platts Dubai and Ice Low Sulphur Gasoil.