China’s Oil Futures Contract Is Beginning to Show Its Teeth
So far so good. Petrodollar will be showing signs of wear-and-tear in the very near future.
We have been documenting the demise of the dollar hegemony for the past several years and the past two years the pace of the demise seems to be moving like a rocket. All the little details since the global financial meltdown in 2008 are now converging and one of the biggest pieces is now showing its teeth – the Chinese oil futures contract priced in yuan is growing in such a way that by the years end, at the current pace of growth, this contract will present a real challenge to the petrodollar.
China’s newly-launched crude oil futures on the Shanghai International Energy Exchange saw its trading volume surge to a record high in early June, a positive sign that a wide variety of financial market players have been keen to contribute liquidity into the new derivative market.
The trading volume for the front-month September delivery crude futures contract was recorded at 275,006 lots last Friday, the highest since it was launched on March 26, and nearly seven times the 40,656 lots seen on the first trading day, data from INE’s website showed.
This normalizes to 137,503 lots based on international practice, as INE counts each side of a trade – the buy and the sell — as two lots. One lot is equivalent to 1,000 barrels. That means around 137.5 million barrels of crude oil changed hands on paper last Friday, S&P Global Platts calculations showed.
INE crude oil futures’ trading volume has been rising steadily since the launch on March 26, with the average daily volume seen at 69,055 lots in April and 170,554 lots in May — a rise of 147% month on month. Source – Platts
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