NYMEX to Begin Listing Middle Eastern Sour Crude Oil Index in Anticipation of Futures Launch

The New York Mercantile Exchange will begin listing on its website on March 8 the Middle Eastern sour crude oil index which will act as the basis for cash settlement of its Middle Eastern sour crude oil futures contract. The index will be based on an average of prices for Oman and Dubai crude oil over the delivery month. The final settlement price of the contract will be based on the mean of those prices over the month, as they have been published by the following major energy industry price reporting services: Telerate, Reuters, Bloomberg, Petroleum Argus, ICIS-LOR, and RIM Intelligence Group. To calculate the index, the Exchange will collect multiple price assessments from each of the six services and average the price of each crude oil as reported by each service during the course of the day for a total of six prices for each type of crude oil. The highest and lowest Dubai price and highest and lowest Oman price will be eliminated and the middle four prices will be averaged to create a single average price per crude oil. These two prices will be averaged together to create the index price for the day. Each day's index price, along with the price for the Oman component, a price for the Dubai component, and the running average of the month's index prices will be published by 10:00 the following day on the Exchange's home page, www.nymex.com. The running average will be the basis of marking-to-market calculations for variation margin payments on positions carried to final settlement. The total average on the last business day of the contract month will be the basis for cash settlement of the futures contract. Exchange President R. Patrick Thompson said, 'In anticipation of the introduction of our futures and options contract, we are delighted to begin to bring greater transparency to the marketplace through the posting of this index, as well as to provide historical pricing information which will be useful for trading the contract.' Kimberly Alderman, sales manager for ICIS-LOR, said, 'ICIS-LOR is pleased to be part of the New York Mercantile Exchange Middle East sour crude oil index.' Robert Garfield, director of commodities and energy marketing for Reuters America, said, 'As a leading provider of news and information to the energy community, Reuters is committed to improving price discovery and better trading tools. The Exchange's Middle East sour crude oil contract will provide both for the crude oil market, and Reuters is pleased to participate. ' Adrian Binks, publisher of Petroleum Argus, said 'Petroleum Argus is delighted to be a part of the New York Mercantile Exchange sour crude oil index. Petroleum Argus's assessments of the value of Oman and Dubai crude oil retain an excellent reputation in the oil industry for accuracy. But in an increasingly thinly traded Middle East sour crude market, the use of basket pricing, through the creation of an index, is a recognised and acceptable method of improving price transparency.' Viren Patel, vice president of energy sales and marketing at Telerate Energy, said, 'The New York Mercantile Exchange is to be commended for responding to interest from the oil trading community for a contract reflecting the fundamentals of a major regional market. A new risk-management tool offered on a regulated exchange can contribute toward price transparency and opportunities for increased liquidity. Telerate Energy's intraday assessments, updated frequentlyduring the global business day, offer a representative indication of a truly global market and will be important components in the Exchange Middle Eastern sour crude oil index .'