Russian oil producers to make money from China’s yuan-backed crude futures – analysts: ずくなしの冷や水

2018年04月16日

Russian oil producers to make money from China’s yuan-backed crude futures – analysts

RT2018/4/15
Russian oil producers to make money from China’s yuan-backed crude futures – analysts
Crude oil exports implemented via Eastern Siberia–Pacific Ocean (ESPO) oil pipeline may substantially benefit from yuan-denominated oil futures launched by China last month, according to industry experts.

If the new product manages to succeed, price pegging of the Russian ESPO export blend to the China contract will favorably influence the Russian oil blend price. The new futures contract may reportedly boost Russian producers’ annual revenues by extra $440 million.

Last year, China topped the US as the biggest oil importer with nearly a million barrels of crude being purchased every day. Chinese oil demand could increase by 2.1 million barrels per day by 2023, according to Wood Mackenzie consulting firm, as quoted by TASS. The analysts stress that Chinese authorities are clearly seeking to exert more influence on oil pricing in this regard.

“Certainly, it is more beneficial for China to make settlements in the national currency. The national futures launch is a step in this direction. This instrument will make possible to form contracts on its basis and perform hedging,” Darya Kozlova from Vygon Consulting told the agency.

“At current import volumes, the contract grades could account for trade of about 200 billion yuan ($31.9 billion). This will help the Chinese government in its efforts to internationalize renminbi,” said Wood Mackenzie's research director Sushant Gupta.

The new product encourages foreign investment in Chinese assets. China’s Finance Ministry even pledged to exempt nonresidents investing into the contract from taxes for up to three years.

“However, if the government continues market interventions, while control measures over capital flow will be tightened, this will only discourage investors,” notes Ekaterina Grushevenko, an expert from the Skolkovo Business School.

Analysts say that Beijing is on its way to creating its own oil benchmark as seven different blends accounting for just 20 percent of total imported volumes are currently authorized for trading.

“Creation of liquid futures is a lengthy and complex yet feasible process, as Dubai’s experience shows. A fairly liquid exchange market is an advantage for China, which is important for benchmark forming” said Kozlova.

RT2018/4/16
Death by a thousand cuts: China’s yuan-priced crude benchmark chips away at petrodollar
China finally launched last month its yuan-denominated crude oil futures that have been in the works for years, after several delays.

The start of the new contract trading was successful, attracting interest from institutional and retail investors, and major commodity trading houses Glencore and Trafigura.

Yet, it’s too soon to call the less-than-a-month-old contract a total success, because it still faces a long road toward building reputation and history, analysts say. They have also identified the single biggest risk factor for western investors−the extent to which China could meddle with government regulation in the yuan crude futures, as Beijing is known for little tolerance toward wild price swings in its markets and has a history of intervening.

This is also the conclusion of China’s biggest crude oil supplier, OPEC. In its April Monthly Oil Market Report, the cartel−which accounts for close to 60 percent of China’s crude oil imports−said that “the extent to which the INE contract is independent from government interference is currently the main risk factor facing western investors, which is in addition to a currency risk, given that the INE is settled in yuan.”

According to Reuters’ John Kemp, possible Chinese intervention on the yuan crude future market could be one of the three elements that could doom the new contract. Citing the paper ‘Why Some Futures Contracts Succeed and Others Fail’, Kemp argues that the third key element to a successful futures contract−public policy should not be too adverse to futures trading−could be the stumbling block to the Chinese crude futures, while the new contract could easily meet the other two criteria for success. These are 1) a commercial need for hedging and 2) a pool of speculators must be attracted to a market.

OPEC, especially its Middle Eastern producers, will be closely watching the futures contract because once established, the Chinese reference crude price could act as a regional benchmark for negotiations of spot or term crude oil prices. The contract is made up of seven medium-sour crudes prevalent in the Chinese market−six freely traded Middle East grades (Basrah Light, Dubai, Masila, Oman, Qatar Marine, and Upper Zakum), and China’s Shengli crude.

“At this level of imports from OPEC, Middle Eastern producing nations will be watching closely as they could, in time, face pressure from their Chinese buyers to adopt this benchmark for pricing their physical crude contracts,” the cartel said in its monthly report.
posted by ZUKUNASHI at 01:00| Comment(0) | 国際・政治
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