Text size:

  • Small
  • Normal
  • Large

Dubai Mercantile Exchange to focus on 'east of Suez' for growth

A focus on the crude oil trading community and on end users in Asia will be the key to the next phase of growth at the Dubai Mercantile Exchange, said the bourse's new chief executive.

A focus on the crude oil trading community and on end-users in Asia will be the key to the next phase of growth at the Dubai Mercantile Exchange (DME), said the bourse's new chief executive.

Increasing the amount of crude priced off the exchange could convince the Arabian Gulf's national oil companies (NOCs) to adopt the DME as a benchmark for their trades, turning the exchange into a benchmark for Arabian oil traded into Asia.

"The next boost we're going to see in the DME is going to be from our existing clients," said Christopher Fix, the chief executive.

The exchange has been successful in growing the volumes of crude traded to about 3.5 million barrels per day (bpd) since starting out five years ago.

It got a boost this year when the Chicago Mercantile Exchange (CME), the world's largest commodity bourse, increased its holding in the DME, becoming the majority shareholder.

The Chicago bourse will help the Dubai exchange to develop its capacities, while efforts to attract the traders and end buyers will have to be stepped up, said Mr Fix.

"We need to focus on what we can do to better our exchange first. And then, as we get momentum, build those contracts and bring in those trading communities, the numbers will go up.

And as the numbers go up, we will become more interesting to different parts of the market."

More than 80 per cent of the oil exported out of the Gulf is traded to Asia, and many in the industry believe that Brent crude, produced in the North Sea, is not an accurate benchmark for the east of Suez trade.

The DME is keen to promote itself as an alternative benchmark, and its prices are based on Oman's 900,000 bpd production.

"The market is in need of a better pricing mechanism for east of Suez trade," said Mr Fix.

Before starting at the exchange in August, the new chief executive spent 20 years in commodity trading with the French bank BNP Paribas, most recently in the Asian energy hub of Singapore.

He is optimistic that more market players will start dealing the exchange's future contracts, and that the DME will eventually be able to supplant the energy information service Platts as the foremost trading platform for Gulf crude.

This will be achieved when the NOCs in the Gulf adopt the DME as the benchmark for their crude sales.

The Dubai exchange is also mulling additional futures contracts, with fuel oil used to power ships one of the products under consideration.

fneuhof@thenational.ae

Back to the top

More articles


Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Above, the private pool of Ocean Heights' five-bedroom penthouse flat. Courtesy Christie’s International Real Estate

In pictures: Penthouse flat is height of Dubai luxury living

A five-bedroom penthouse in Ocean Heights in Dubai Marina is on sale for Dh25 million and comes with a private pool and an unparalleled view of Dubai.

 The cooling towers of the Temelin nuclear power plant near the Tyn nad Vltavou in Czech Republic. The country wants to continue expanding nuclear energy capacity despite cancelling a tender to build two new units. David W Cerny / Reuters

In pictures: Best business images for the week to April 17, 2014

Here are some of the best business images for the week to April 17, 2014.

 Three generations of the Hakimi family tend to their stall Crawford Market in Mumbai. Subhash Sharma for The National

In pictures: Shopper’s delight at Crawford Market in Mumbai

Crawford Market is an old British-style covered market dealing in just about every kind of fresh food and domestic animal imaginable. Later on renamed Mahatma Jotirao Phule, the market remains popular among locals and visitors by its old name, taken from Arthur Crawford who was the first municipal commissioner of the city.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National