China oil market reform paves way for new crude benchmark

Wed Sep 2, 2015 4:50am GMT
 

* Chinese crude futures could be launched as early as October

* Exchange seeks foreign players for yuan-denominated contract

* Oil market reforms will squeeze China's state oil giants

By Jacob Gronholt-Pedersen

SINGAPORE, Sept 2 (Reuters) - China may launch a global crude oil futures contract as early as October to compete with the existing London Brent and the U.S. WTI benchmarks, three sources said, as it pushes ahead with reforms to open up its oil markets.

The long-awaited crude contract would better reflect China's growing importance in setting crude prices, as well as boost the use of the yuan in which it will be traded, although volatile global trading conditions and China's recent interference in stock markets have raised some concerns.

The Shanghai International Energy Exchange, also known as INE, circulated a draft of the futures contract to market participants last month, saying the launch could happen as early as October, the sources who saw the draft, told Reuters.

China, the world's second-biggest oil consumer, has already begun to loosen its grip on the physical oil sector this year by granting quotas for imported crude to privately-owned refiners for the first time, surprising market participants with the speed of reform.

"The development of a futures market is closely linked to the physical market," INE said in a statement issued to Reuters in response to questions about the new contract.   Continued...

  • Africa
  • US
  • Europe
  • Asia
UK £ USD =1.2473
Euro USD =1.0825
Rand USD =0.0771