ADNOC wants Murban as a price marker alongside Brent crude

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Abu Dhabi National Oil Company’s head of trading said on Tuesday that ADNOC wanted to make its Murban futures contract a price marker alongside Brent futures.

“The Brent is depleting in quality and quantity,” Philippe Khoury said at the ADIPEC energy conference.

Khoury also expects Murban futures to trade at a premium to Brent next year.

His remarks came a day after Intercontinental Exchange (ICE), the owner of the New York Stock Exchange, announced the launch of a new exchange called ICE Futures Abu Dhabi to host futures contracts based on ADNOC’s Murban crude oil.

Murban, which accounts for about half of ADNOC’s total crude oil output, serves as a benchmark for most Asian refiners and its futures launch comes amid intense competition from US shale exports.

A futures contract is a contract for assets (in this case oil) bought at an agreed price but delivered at a later date. Futures contracts typically trade on an exchange and are used as a hedge against market volatility or speculated on by traders expecting price movements.

Other oil industry executives also sounded optimism over Murban crude futures’ prospects.

Vitol’s Chief Executive Russell Hardy said that the company’s decision to buy a stake in Abu Dhabi’s new oil exchange will give the commodities trader the opportunity to put its weight behind the initiative. This would translate to good amount of volume and liquidity into the exchange, he added.

Nine energy companies, including BP, Shell, and France’s Total SA, agreed to become partners in the exchange on Monday.

ICE Chief Executive Officer Jeffrey Sprecher said that Murban would create a “functional symbol” for Middle East crude.

“This grade of crude is going to be recognized as Abu Dhabi around the world,” he added.

ICE Futures Abu Dhabi will be set up in Abu Dhabi’s financial center, the Abu Dhabi Global Market (ADGM).

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