1999 Record Year For IPE

Volumes of trade at the IPE reached their highest ever level last year as dramatic oil price movements drove home the advantages of using the IPE for managing risk and trading. Overall, total volumes of trade for all contracts rose above 23 million lots, almost a fifth higher than 1998 levels. This represents 21 billion barrels of oil, and more than 9 billion therms of natural gas. At today's prices, total Exchange traded volume is worth more than $500 billion. The extraordinary swings in oil prices experienced over the year can be demonstrated by movements in Brent Crude futures, which is a key part of the complex used as a benchmark for two thirds of the world's internationally traded crude oil. At the beginning of the year prompt Brent Crude futures traded as low as $9.90/bl (17 February 1999), only 35c/bl away from the all time low of $9.55/bl traded in December 1998. But by the end of the year prices had risen to as much as $26.15/bl (16 December 1999), the highest level seen for almost nine years. Brent Crude futures accounted for about 70% of total volume, trading almost 16 million lots (equivalent to just under 16 billion barrels of crude oil). This represents a 17 % rise from the previous year. Brent Crude and Gas Oil options experienced the highest year on year growth. Volumes have risen by more than 35% overall and by almost 50% for Brent Crude. In the course of the year the IPE made a number of improvements to the services it offers the industry. These included extending the forward reach of the Natural Gas and Gas Oil futures contracts to three years in line with Brent Crude futures on 4 October. Previously, Natural Gas futures traded out 15 months and Gas Oil futures 18 months. Fuel Oil futures were launched on 3 September to provide an additional risk management tool for the oil and shipping industries. On 8 November the IPE began publishing the Brent Trade Weighted Average price, which can be used as a useful pricing indicator for the physical market. The IPE has also published proposals for a UK emissions trading programme and has worked with the industry towards designing a new electricity market to be launched in the second quarter of 2000. Richard Ward, chief executive of the IPE, said "it is clear that 1999 has been a great year for business at the IPE. Volumes have risen dramatically as the benefits of using Exchange traded risk management techniques became increasingly obvious to an ever-broadening range of participants. I would like to thank our Members and users for such a resounding vote of confidence in the Exchange and the products we offer and we look forward to helping to meet new needs in successive years".