Trading in Murban oil futures – the world’s first futures contract predicated on the Abu Dhabi National Oil Company’s (ADNOC’s) flagship onshore crude – has gotten off to a flying start, according to data released by the Intercontinental Exchange.
In a statement, the market infrastructure provider said that a record 14,419 Murban crude oil futures contracts traded on ICE Futures Abu Dhabi (IFAD) on April 7, marking its highest daily volume since the contracts launched on March 29. That’s equivalent to over 14.4 million barrels of Murban crude oil.
Overall, a total of 38,712 contracts have traded on IFAD since the launch to Thursday (April 8). The figure includes 34,202 ICE Murban crude oil futures contracts, and 4,510 Murban-related cash settled derivatives.
Meanwhile, JPMorgan Securities became the latest to join the ranks of IFAD’s 26 exchange members and 19 Clearing Members, with 38 firms having traded on IFAD since March 29.
Alongside ICE Murban crude oil futures, IFAD launched trading in 18 Murban-related cash settled derivatives and inter-commodity spreads, offering a broad range of ways to trade and hedge Murban crude oil. Going by initial data, the direction of travel for the nascent crude contract looks promising.
“The scale of the response from the market to the launch of Murban futures is both encouraging and validating,” said Jamal Oulhadj, President of ICE Futures Abu Dhabi.
“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.”
ADNOC’s decision to remove destination restrictions on the crude has generated a lot interest. For traders, it’s an opportunity to buy Murban oil and have the ability to sell it anywhere in the world. It’s something that currently sets Murban apart from its regional competitors who have historically been shackled by restrictions, and one that they would be eyeing.
All eyes are on the continued demand for oil in the Asian market which is likely to have significant impact on the Murban contract. That’s because the Middle East in general, and ADNOC in particular, remains a key regional supplier to Asian oil importers.
If the initial week’s numbers are anything to go by, the introduction of a new futures contract is likely to make Murban more attractive to these customers. Asian refiners will now have a direct means to hedge against shifts in the price of Murban, rather than using derivatives linked to Dubai crude and might bring with it some very interesting market ramifications.