Thursday, January 18, 2018

It's now Jan. 18 and do you know where your yuan-denominated oil contract is?

Alternative economists have been looking forward to Jan. 18 ever since an anonymous source within the Chinese energy exchange hinted that today would be the start of China's long-anticipated yuan-denominated oil contract.  However as we commence trading here in the U.S. markets on Thursday morning, not a single sign has emerged that it has been initiated over in Asia.

The Chinese have been consistent in often leaking dates for the implementation of some of their biggest financial platforms, only to later hold off from implementation on that date, or use it as a teaser to see how market react.  And with this in mind, analysts over at Platts have dropped a new date for the oil contract to go fully online, and it coincides with the ending of China's New Year holiday in February.

China is inching closer to launching its first crude oil futures contract but it will happen only after the Lunar New Year holiday which ends on February 23, a government source with knowledge of the matter said. 
"Basically, there is no problem [for the crude contract] to get approval from the State Council," the source said, but added that it was unlikely to be kicked off before the Lunar New Year. 
Approval from the State Council is the final hurdle in the launch of the medium sour crude futures contract. 
Once it is approved, the exchange will release the deliverable crude grades, differentials of the deliverable grades against the standard contract and the delivery venue, a source with host platform Shanghai International Energy Exchange said recently. 
"The exchange should officially release these details two weeks ahead of the launch in order to give enough time to inform the potential players," said a futures trader in South China. 
Given this schedule, analysts expect the earliest launch date as most likely in late March after China's most important annual political events in early to middle March -- the National People's Congress and the Chinese People's Political Consultative Conference. - Platts


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