Just a day after China’s Yuan priced oil futures began trading in Shanghai Unipec, the trading arm of Asia’s largest refiner Sinopec and oil major Royal Dutch Shell priced a Middle East crude contract with Shanghai crude futures.
Just a day after China’s Yuan priced oil futures began trading in Shanghai Unipec, the trading arm of Asia’s largest refiner Sinopec and oil major Royal Dutch Shell priced a Middle East crude contract with Shanghai crude futures.
Unipec Asia, based in Hong Kong will buy the crude delivered to China for one year starting from September, a Reuters source said. While he declined to comment on the counterparty and the purchase volume, Shell International Eastern Trading Co, the trading arm of Royal Dutch Shell, was heard to be the seller.
“We believe the (Shanghai) contract will have a big impact on oil pricing in Asia,” the Unipec official said. “The timing is good as China has opened up the market for independent refiners to import crude,” the source said. “We hope it will be successful.”
High trading volumes for the Shanghai crude contract on its first day surprised many with western commodity merchants and Chinese oil firms both traded actively.
Over 15 million barrels per day of Middle East and Russian crude exported to Asia are currently priced using the Dubai and Oman benchmarks assessed by price reporting agency S&P Global Platts and the Oman crude futures on the Dubai Mercantile Exchange (DME).
“The liquidity for Shanghai crude futures will surpass that of DME,” the Unipec offical said. This would give an alternative price marker for oil deliveries in China. Of course that is one of the aims of the China exchange.
Source: Reuters