SINGAPORE, March 29 (Reuters) - A new oil trading exchange, the ICE Futures Abu Dhabi (IFAD), launched on Monday, backed by the Intercontinental Exchange Inc, Abu Dhabi National Oil Co (ADNOC) and partners, with trading of a Murban crude futures contract to start at 0100 GMT.
Abu Dhabi-based IFAD hopes the new contract, which prices the flagship Abu Dhabi grade that accounts for about 50% of ADNOC’s production, will become an alternative Middle East benchmark. It will compete with Dubai, operated by S&P Global Platts, and the 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.
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.
Murban is considered as a light sweet crude and has an API gravity of 40.5 degrees and a sulphur content of 0.79%, with output of about 1.6 million to 1.7 million barrels per day (bpd). 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