Business | Oil & Gas
Dubai Mercantile Exchange seeks more oil producers
Trading volumes rise to record daily average in October
- Reuters
- Published: 00:00 November 5, 2009
Singapore: The Dubai Mercantile Exchange (DME) is seeking more crude oil producers from the Middle East and East Asia to boost its liquidity, even as it continues to woo Saudi Arabia to use it as a marker, its CEO said on Tuesday.
Saudi support is crucial to the DME's success as a marker for 12 million barrels per day (bpd) of Gulf crude exported to Asia. But Saudi Arabia will only do so if the benchmark has been tested and has liquidity, which would mean that they could be the last to do so, industry sources had said.
Thomas Leaver, DME's chief executive officer, said its hopes to rope in the oil kingpin is still in the pipeline.
"We have been in discussions with all the producers in the Gulf about the merits of moving to the DME, they [Saudi] are included in that," Leaver said.
"There is a growing logic in moving towards the DME for pricing, not only the Gulf countries, but other producers like Malaysia, Yemen, Vietnam, or even Russia," he said ahead of the Asia Pacific Petroleum Conference (APPEC) this week.
Leaver said that liquidity on the exchange has risen 58 per cent, year-on-year, in the 12 months ended last month.
Trading volumes have risen to a record daily average of 2,624 lots for October.
Volumes had hit a record 8,076 lots on June 23 after Dubai said it would start setting the official selling price of its benchmark crude in relation to Oman oil futures, before falling to between 1,000 and 3,000 lots a day over the past few months.
No comments
DME had wanted to see more than 10,000 lots daily. When asked about its trading volume growth target, Leaver declined to comment. He also declined to give a timeframe for Saudi Arabia to price off DME, but said it would be a customer-driven move.
"All arrows are pointing to the right direction. We are cautiously optimistic."
The DME on Monday welcomed a move by Saudi Arabia to drop the US light sweet crude oil benchmark as the basis for pricing its sales to the US in favour of the Argus sour crude index, describing it as a more representative marker for customers.
DME Oman is currently the benchmark for Dubai and Oman crudes, while Platts' Dubai and Oman assessments are used in pricing formulas by the majority of Gulf producers, including the Saudis.
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