Dubai: The Department of Oil Affairs in the government of Dubai yesterday announced that it had advised its customers that the official price of Dubai crude oil, which will be delivered in October 2010, will be 20 cents (Dh0.73) less per barrel than the average daily settlement price of the DME Oman Crude Oil Financial Contract in Dubai Mercantile Exchange contracts traded during the next month.
The department sets the price of Dubai crude oil in the markets in parallel with Oman oil prices, which reinforces the transparency of pricing process' commitment and setting a fair value of crude oil in the Middle East.
The official monthly price of Dubai crude oil — with the transition to the pricing futures contracts — is determined in advance, for a differential price is placed before three months, ‘M-3', while the official final monthly price is determined at the end of the second month ‘M-2'.
The DME Oman crude oil is considered as a benchmark for pricing crude oil by the countries that produce it, and it gives them a differential price that reflects the quality of the product.
Settlement price
Everyday at 12.30pm (local time), the Dubai Mercantile Exchange determines the daily settlement price of the Oman contract, which is the average price of transactions made within five minutes from 12.25pm to 12.30pm, Dubai time.
On the last circulating day of the month, the settlement's window lasts for thirty minutes from 12pm till 12.30pm, Dubai time.
The Dubai Mercantile Exchange is the first regarding futures trading of commodities and energy in the Middle East.
