CME Announces Clearing Of 4 More Argus-Linked Oil Contracts

CME Group Inc. (CME) will begin trading and clearing of four futures contracts tied to the Argus Sour Crude Index later this month, the exchange operator said Thursday.

CME and rival IntercontinentalExchange Inc. (ICE) have rapidly unrolled derivatives linked to the index after its creator, London-based Argus Media, said in October that Saudi Arabia would begin using the benchmark to price oil sold in the U.S.

Saudi Arabia's move, which goes into effect in January, is likely to create a large pool of demand for futures contracts that would allow customers to reduce exposure to fluctuating physical oil prices. Saudi Arabia had previously used a West Texas Intermediate price assessment tied to light, sweet crude futures offered on the New York Mercantile Exchange, which is owned by CME.

CME plans to offer five new swap future contracts, which allow for trades conducted over-the-counter to be cleared, or partially guaranteed, through the exchange. Several of the new contracts will facilitate trading of the difference in price between the Argus index and WTI, a market that will play a major role in determining which exchange operator wins the bulk of new trading volume.

Each will begin trading and clearing on Nov. 22. A sour crude futures contract that closely mirrors the Argus index will be offered by CME before the end of January.

The new contracts are as follows: ASCI vs. WTI diff spread trade month, ASCI calendar month, ASCI vs. WTI diff spread calendar month, and Argus WTI formula calendar month. CME had earlier announced an ASCI trade month swap futures contract.

ICE has said it will begin clearing two Argus-linked OTC contracts on Friday, and announced that two futures contracts would launch on ICE Futures Europe on Dec. 7.

-By Brian Baskin, Dow Jones Newswires; 212-416-2453; brian.baskin@dowjones.com

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