The Dubai Mercantile Exchange plans to open an office in Singapore, its first outside the emirate, and is hiring executives in its effort to make the Oman crude futures contract a price benchmark for Arab producers.
The Dubai-based exchange expects to add Reliance Industries Ltd. (RIL) of India as a trading member, the bourse’s chief executive officer, Thomas Leaver, said in an April 9 interview. Reliance would join Glencore International Plc, Vitol Group and other energy traders as members.
Trading in Oman futures, which started in 2007, rose 57 percent in the first three months of this year to an average daily volume of 4,832 contracts in the period. Bigger trading volumes and wider acceptance of the contract should encourage producers and buyers of Middle Eastern oil to adopt it as a benchmark for long-term crude sales to Asia, Leaver said.
Dubai, the second-biggest sheikhdom in the United Arab Emirates, began using the contract as a benchmark for its oil in 2009. The more popular standard for Middle Eastern crude is the Dubai price assessment published by Platts, an energy- information division of McGraw-Hill Cos.
“We always believed that when we added enough volume, adoption of the DME would be an obvious solution,” he said, without specifying a trading threshold above which producing countries would see a need to adopt Oman as a benchmark. “We could do more in reaching out to our customers.”
Leaver Steps Down
Leaver resigned from his post last month and is staying on until the DME finds a successor. He started as CEO in 2008.
Rod Banus, a former head of futures for Asia Pacific at Barclays Plc who later joined Singapore Exchange Ltd. as a senior adviser for commodities, took over as the DME’s director for customer relations last month, Leaver said. The exchange also hired Rami Abu-Rmaileh as a business development executive, to begin later this month, Leaver said.
Banus will be responsible for hiring someone to open the bourse’s planned Singapore office and will work with Chicago- based CME Group Inc. (CME), the exchange’s majority shareholder, to try to boost trading in Oman crude futures, the CEO said. Singapore is Asia’s main trading hub for oil and refined products.
The DME plans to ask officials in Abu Dhabi, holder of most of the U.A.E.’s oil, to adopt the Oman contract as a price benchmark for the crude they expect to ship from Fujairah, another of the nation’s seven sheikhdoms, Leaver said. Government-owned Abu Dhabi National Oil Co. is completing a pipeline to the port of Fujairah, and U.A.E. officials have said they expect the link to begin transporting crude for export in the first half of this year.
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