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Middle East’s first energy contract - Fujairah 380 CST High Sulphur Fuel Oil Futures Contract, starts trading on the Dubai Gold and Commodities Exchange (DGCX) today. DGCX, the only commodity derivatives exchange in the Middle East added the first energy product – fuel oil contract, to its portfolio of products which include gold, silver and currency futures. Fuel oil is the sixth futures product to be traded on DGCX before the Exchange celebrates its first anniversary on November 22, 2006.
Commenting on the contract, Mr. Framroze Pochara, CEO stated: “The fuel oil contract will cater to the needs of the oil players in the region by providing an efficient tool to hedge price risks for all participants. Of course, the region being one of the crucial oil hubs of the world, the contract will bring about a fundamental transformation in the way the course of actual physical trade in the product is determined. I am glad to say that with this contract, DGCX is hitting one more milestone in its drive for accelerating the growth of the commodities market in the region. This indeed is a historic moment for us.”
The Fujairah 380 CST HSFO contract will trade six consecutive months in the future with January 2007 as the near month contract. The size of each contract will be 100 metric tonnes with delivery points in Fujairah.
The contract assumes special significance given the special role the product plays in the economy of the region. Bunkering accounts for 80 per cent of the total fuel oil consumption in the UAE with the Port of Fujairah supplying approximately 12 million metric tones of bunker fuel annually. The introduction of fuel oil futures in Dubai is expected to result in better price discovery and market dynamism for the oil rich Gulf region.
The next energy contract to be launched on DGCX is the gasoline futures contract which will be introduced in 2007.
