Pratim Ranjan Bose

Kolkata, June 19

MULTI-Commodity Exchange (MCX) has sought approval for introducing futures trading in natural gas. Having launched light sweet crude futures in February, the company will roll out futures for the sour (Brent) variety of crude oil on June 20 to be followed by the Dubai-Oman crude.

Light sweet crude is popularly referred to as West Texas Intermediate (WTI) variety and has a higher price correlation with the benchmark global exchanges like The New York Mercantile Exchange Inc (NYMEX).

WTI is generally priced at about a $2-4 a barrel premium to the Dubai-Oman crude and about $1-2 a barrel premium to Brent. The latter (Brent) stands as a benchmark for Europe. India, on the other hand, primarily imports the high Sulphur Middle East crude.

Mr Joseph Massey, Deputy Managing Director of MCX, told Business Line that as part of its plans to explore business potential in the energy sector, the company recently firmed up plans for launching futures trading in natural gas.

As part of the consolidation, the company has firmed up plans to introduce forward contracts on all three major varieties of crude basket available globally.

"We will be launching futures on Brent on Monday and have received approval for launching the Middle East (popularly known as Dubai-Oman) crude." The latter is expected to be launched once Brent futures secures a reasonable volume.

Launched on February 9, MCX has recorded a peak contract volume of 21 lakh barrels worth over Rs 502 crore early this month in light sweet crude. The average daily volumes are now hovering between 10 and 15 lakh barrels.

A substantial part of the volume is contributed by general investors from the securities and the bullion market who are exploiting arbitrage opportunities in crude futures.

(This article was published in the Business Line print edition dated June 20, 2005)
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