China treasury bond futures close mixed Monday

Javier Stokes
March 27, 2018

The jump came after Brent futures for May delivery opened above $70 per barrel for the first time since January on expectations OPEC-leader Saudi Arabia may extend supply cuts into 2019, as well as over concern that the United States may reintroduce sanctions against Iran.

Already on Monday, Unipec, the trading arm of Asia's largest refiner Sinopec, has inked a deal with a western oil major to buy Middle East crude priced against the newly-launched Shanghai crude futures contract.

Shanghai crude oil futures opened up more than 6 percent with nearly 20 million barrels of the most-active September contract changing hands in the first 25 minutes as China debuted its oil benchmark. This is the first in Asia, and it allows foreign companies to participate, with contracts being settled in renminbi (the yuan is the basic unit of the renminbi). Prices assessed at the Shanghai exchange will reflect China's crude supply and demand.

That may begin to change gradually going forward, as today saw the launch of Chinese crude oil futures out of Shanghai - Asia, despite being the world's biggest and fastest growing oil consumer, has so far not had a benchmark.

China's desire to open a domestic market to trade futures has grown as the country's crude imports have boomed.

China's launch on Monday of its crude futures exchange will improve the clout of the yuan in financial markets and could threaten the global primacy of the dollar, argues a new report by Hayden Briscoe, APAC head of fixed income at UBS Asset Management.

The most active contracts on the first day of trading traded at a discount of more than $1 a barrel to the benchmark Brent crude price in London.

Oil prices retreat from 2-month high as US-China trade dispute looms

Straits said it brokered the first trade for Glencore and cleared the deal through Xinhu Futures.

For China's regulators, the hope is that the futures would serve as a risk management tool for its oil companies, act as a price reference for industry participants, as well as help open the nation's financial markets. Absence of a paper market could limit liquidity, as these contracts are expected to be physically settled.

Oil prices reversed earlier gains on Monday as concern over a looming trade dispute between the U.S. and China weighed on global markets.

Speculative retail and institutional investors drove much of the launch-day's liquidity, said Chen Tong, Shanghai-based senior crude analyst at First Futures. "In the long run, yuan crude price will mirror the moves of Brent", he said.

Futures for September settlement opened at 440 yuan a barrel, up from a reference price of 416 yuan.

At 9:24 a.m. (0224 GMT) prices were up 3.29 per cent at 430 yuan, with 19,122 lots, equal to 19.1 million barrels of oil, traded.

Organizers try to draw half million to DC gun control rally
Overall, 90 percent of Democrats, 50 percent of Republicans and 54 percent of gun owners now favor stricter gun control laws. A CNN poll released February 25 found that seven in 10 people nationwide favor stricter gun laws.

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