China took a step closer to adding crude futures to its domestic commodities markets as the world’s second-biggest oil consumer seeks greater influence in determining the price of raw materials. The Shanghai International Energy Exchange will start yuan-denominated crude futures in the city’s free-trade zone at the end of this year, Lu Feng, an official at the bourse, said at a conference Friday. The contract will trade in 100-barrel lots, with an American Petroleum Institute gravity of 32 degrees and sulfur content of 1.5 percent, he said. As the world’s largest user of energy, metals and grains, China is seeking to extend its clout over prices by opening up trading to a larger pool of investors with its own contracts. The nation, which overtook the U.S. as the leading crude importer in April, is now pushing to establish a benchmark price for oil in Asia after starting gold trading in the free-trade zone last year. “China is paving the way to having its own complete financial trading platform,” said Gordon Kwan, the Hong Kong-based head of regional oil and gas research at Nomura Holdings Inc. Foreign investors won’t take part “initially until they’ve seen that it’s a liquid market.” The … continue reading
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Source: CTRM Center