IPE Fuel Oil Futures Imminent

A new risk management tool will shortly be made available to the oil and shipping industries - Fuel Oil futures. The IPE Board of Directors has approved the scheduled launch date of 3 September. The IPE has developed the contract after nine months of discussion with industry. A working group was set up to advise on the contract development and consisted of both IPE Members and other companies active in the physical market. The IPE and the working group have decided after wider consultation with Members and industry that the contract will have the best chances of success if it is traded by open outcry from within the Gas Oil pit. The contract is designed around bunker specification fuel oil (for use in ships) and based on the 3.5% sulphur FOB Rotterdam barge market. The contract size will be 100 tonnes and the minimum price fluctuation 5 cents/tonne. The forward range of the contract will be up to three years, consisting of 12 consecutive months, followed by four quarters and then two halves. It will be traded by open outcry between 09.05 and 17.05 London time. It is planned that the contract will also be traded electronically out of these hours in the future. Richard Ward, Executive Vice President of the IPE said, "we are committed to launching energy contracts that meet the needs of our Members and industry and Fuel Oil sits extremely well within our existing portfolio of products. Our discussions with the industry have indicated that there is a real interest in Fuel Oil futures as a risk management tool".