SINGAPORE, March 30 (Reuters) - Abu Dhabi started trading
Murban crude futures contracts on Monday, offering a potential
rival benchmark for trading Middle East crude.
The key contract of the new ICE Futures Abu Dhabi
(IFAD) oil exchange closed at $64.07 per barrel as of 6 p.m. ET
(2200 GMT) with 6,344 lots traded, ICE said on Twitter. Each lot
is 1,000 barrels.
Abu Dhabi-based IFAD is backed by the Intercontinental
Exchange Inc, Abu Dhabi National Oil Co (ADNOC) and
partners including international oil majors.
"Starting today, Murban futures will be freely traded from
Singapore to London, and from Abu Dhabi to New York," ADNOC
Chief Executive Sultan al-Jaber said at the launch event.
The Murban contract, which prices the flagship Abu Dhabi
grade that accounts for more than half of ADNOC's production,
will offer an alternative benchmark to Dubai, operated by S&P
Global Platts, and Oman crude futures traded on the Dubai
Mercantile Exchange (DME).
The contract will enable traders to hedge Middle East crude
and refining margins against the grade. It would also allow
traders to compare the values of competing supplies from Russia,
Europe and the United States with similar quality to Murban
using a range of cash-settled derivatives against Brent,
West Texas Intermediate.
The contract prices the crude two months ahead with the
first expiry month set for June. It is a physically delivered
contract with delivery at Fujairah in the United Arab Emirates
on a free-on-board (FOB) basis.
Other partners in IFAD include BP, Total,
Inpex, Vitol, Shell, PetroChina
, South Korea's GS Caltex, Japan's Eneos Holdings
and Thailand's PTT Plc. IFAD's launch was
delayed by nearly a year due to the COVID-19 pandemic.
ADNOC will set the monthly official selling price (OSP) for
Murban based on the futures contract and price its other three
grades, Das, Umm Lulu and Upper Zakum, at differentials to the
Murban contract. To allow its oil be freely traded, the producer
removed restrictions on destinations for all its crude exports
ahead of the launch.
Murban is considered as a light sweet crude and has an API
gravity of 39.9 degrees and a sulphur content of 0.78%, with
output of about 2 million barrels per day (bpd), according to
ICE. API gravity measures a crude's density.
The UAE, the third biggest oil producer in the Organization
of the Petroleum Exporting Countries (OPEC) behind Saudi Arabia
and Iraq, pumps about 2.5 million to 3 million bpd, mostly
produced by ADNOC.
(Reporting by Florence Tan; editing by Richard Pullin and