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Asian Petroleum Review : Jan-March 2011
28 Trade in six new Oman crude-related swaps and option contracts listed this week reached a "phenomenal" volume equivalent to about 750,000 barrels in their first two days, Dubai Mercan- tile Exchange chief executive Thomas Leaver said. The new contracts, listed on partner and share- holder exchange NYMEX, are part of efforts to woo Middle East oil producers to price their exports using the DME's flaghsip Oman futures contract. This will create new hedging possibilities for end-users inter- ested in avoiding so-called basis risk, Leaver said in Singapore. The swaps and options "will be supportive of that ini- tiative. If they are going to make the move, they want to be sure we are going to be there tomorrow." The total volume for the two most liquid contracts, the DME Oman crude oil swap futures and the DME Oman crude oil balance-of-month swap futures, was about 750 lots in the first two days of trading, Tues- day and Wednesday, the exchange said. The other four contracts are the ICE Brent versus DME Oman crude oil swap futures, the DME Oman average price option and two Oman-linked crack swaps, one for Singapore gasoline and one for Singapore gasoil. The exchange may launch a third crack swap for fuel oil next year, Leaver said. The exchange launched the Oman crude futures contract in 2007, aiming for it to become the marker for the 12 million barrels per day (bpd) of crude that move from the Middle East to Asia, according to Reuters estimates. So far the DME Oman contract is the benchmark for about 900,000 bpd, the exchange says, all of it output from Oman and Dubai. Saudi Arabia's adoption of the benchmark remains key for any full scale transition to DME, Leaver says. Trade volumes of the Oman futures surpassed 4,500 lots on Wednesday, Leaver said, compared with an average of about 2,950 so far this year. That compares with a threshold of 10,000 con- tracts per day, which the exchange has pegged as the level for commercial success. (Reporting by Alejandro Barbajosa) Thomson Reuters Asia Petroleum Review Dubai Mercantile Exchange (DME) CEO Thomas Leaver speaks during the Reuters Middle East Investment Summit in Dubai REUTERS/Jumanah El-Heloueh Debuting oil swaps, options set stage for Oman as benchmark -DME SINGAPORE "The tipping point for DME is the producer acceptance" - Thomas Leaver ,CEO,DME