Murban crude futures register largest single-day trading volume

The equivalent of 132 million barrels of the premium Abu Dhabi grade have traded since March 29

Contracts traded at Ifad will be cleared at Ice Clear Europe alongside global benchmarks such as Brent, West Texas Intermediate, Ice Platts Dubai and Ice Low Sulphur Gasoil. Courtesy Adnoc

Murban crude futures traded a record 18,848 contracts on Tuesday, the equivalent of nearly 19 million barrels of the Abu Dhabi premium grade.

The volume was the highest since the launch of Murban crude futures on the Ice Futures Abu Dhabi exchange on March 29.

A total of 132,450 contracts have so far been traded on the exchange following the launch, with the volume equivalent to 132 million barrels of Murban grade oil.

To date, around 49 companies have traded on the Ifad exchange, which is based in Abu Dhabi Global Market. Of the total volume registered so far, 95 per cent are Murban crude oil future contracts, while the remainder include cash-settled derivatives based on the grade.

Adnoc switched from a retroactive pricing model to forward pricing last year as it sought to create a futures contract that allows oil from the emirate to become a freely traded global commodity, filling a void in the trading and pricing of crude from the Middle East, which is the biggest supplier to global energy markets.

“Although we are only in week four, we are seeing week-on-week growth in traded volumes and open interest in both the prompt and deferred months, with activity out to January 2022," said Ifad president Jamal Oulhadj.

"New daily volume records are being set each week and there is an increasing number of participants trading Murban,” he added.

The trend was indicative of the energy industry favouring Murban as a new way to hedge "forward price risk" with "the physical and financial sides of the market coming together to contribute to the price formation process of Murban crude oil”.

Murban is a light, sweet crude that is popular among Asian buyers, who increasingly dominate the global trade in oil. One million barrels per day of Murban crude are available for export. The UAE, which accounts for 4.2 per cent of global crude output, has the capacity to produce 2 million bpd of Murban.

The exchange also added Wedbush Securities as a new exchange and clearing member. The addition of the California-based investment firm raises the total to 27 exchange members and 20 clearing members.

The futures are open for trade 24 hours a day on Mondays and 22 hours a day from Tuesdays to Fridays. Investors from jurisdictions including the ADGM, the US, Singapore, UK, Switzerland, the Netherlands, France, Norway, Australia, Japan and South Korea are able to trade on the exchange.

Adnoc set up Ifad with Intercontinental Exchange, the parent company of the New York Stock Exchange. Ifad is supported by several of Adnoc's trading and upstream partners. The Abu Dhabi producer is ensuring greater transparency in the trade of Murban by allowing market participants to have an insight into available volumes for the grade for 12 months.

Contracts traded on the Ifad exchange will be cleared at Ice Clear Europe alongside global benchmarks such as Brent, West Texas Intermediate, Ice Platts Dubai and Ice Low Sulphur Gasoil.