Oman crude futures to trade in Chicago

The Dubai Mercantile Exchange (DME) has agreed to transfer trading in Oman crude oil futures to Chicago.

The Dubai Mercantile Exchange (DME) has agreed to transfer trading in Oman crude oil futures to the electronic platform of the Chicago Mercantile Exchange (CME), owned by one of its biggest shareholders.
"We will be listing the DME sour crude contract on the CME Globex platform in the first quarter of 2009," Ahmad Sharaf, the DME chairman, said yesterday.
The move would enhance the liquidity and transparency of the Middle-Eastern oil contract by enabling it to trade alongside futures contracts for the US and European benchmark crudes on the same electronic platform, DME officials predicted. It also would provide investors in 85 countries and territories with "around the clock access" to the Oman crude contract, helping to build "global visibility" for the contract, they said.
"This is a crucial part of price discovery for the region," said the DME chief executive, Thomas Leaver.
The Middle East provided 60 per cent of the oil consumed in Asian markets, he added.
Following the transfer, the Oman crude contract, which has traded electronically since its creation early last year, will trade exclusively on the Chicago-based Globex platform.
Other DME commodities contracts could later be listed on Globex, and new contracts could be created, provided industry-backed support existed for them, Mr Leaver said.
"The CME platform will give us the profile to build liquidity. Then we can concentrate on other products and build a commodities trading hub for the region," he said. "The visibility and reach offered by the CME Globex will give further impetus to the growing liquidity of the DME contracts, and we are confident that is a strong first step in a long and productive partnership with the CME Group."
The group, which owns the Chicago and New York mercantile exchanges following its US$9.4 billion (Dh34.52sbn) takeover of the New York exchange in August, is one of three shareholders each with a 25 per cent holding in the DME. The other two major DME shareholders are Dubai Holding's Tatweer unit and Oman Investment Fund, owned respectively by the governments of Dubai and Oman.CME and Nymex member firms hold the remaining DME shares.
Terry Duffy,the executive chairman of CME Group, said the addition of DME contracts to Globex strengthened the CME's links with the Middle East. The Dubai Financial Services Authority, which regulates the DME, recently confirmed CME Group as a "recognised body" in Dubai's financial sector.
Following heavy international criticism over lack of transparency related to Middle-Eastern oil production and pricing mechanisms, Opec acknowledged at its Oct 24 emergency meeting that transparency was important for stabilising prices.
Oman, which produces the oil traded on the DME, is not an Opec member.
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