UPDATE: ICE Launches New Brent Contract To Lackluster Response

The planned launch of IntercontinentalExchange Inc.'s (ICE) new Brent futures and options contracts Monday caused little stir in the oil market as investors remained more focused on immediate price fluctuations, traders and analysts said.

"We added Brent NX to our system this morning, but it hasn't traded any volume to speak of," said one broker, while a trader on the futures market added: "I must admit, I'm surprised how little chatter I've heard on the issue."

ICE was not immediately available to comment.

Brent is a closely watched global benchmark for oil prices, but over the years declining production volumes in the North Sea oil fields where it is found have caused concerns over price fluctuations.

Now Platts, the McGraw Hill Co. (MHP)-owned company that calculates the price of Brent on the physical market, intends to extend the period over which it assesses the oil price to 16 days from the current 12 to increase liquidity in the benchmark.

ICE's new contracts, known as Brent NX, have different expiry dates from the current Brent futures contracts and are intended to better align the futures and physical markets ahead of the January changes to the pricing system on the physical market.

Market participants said that uptake of ICE's new contract was likely to be slow, particularly as the first month available to trade is December 2012.

"Usually the liquidity is more in the front than the back so it's not going to create a lot of liquidity immediately," said Olivier Jakob, managing director of Swiss consultancy Petromatrix.

Next week, rival exchange, CME Group Inc. (CME), will launch its own version of the Brent NX contract in a bid to make inroads into the Brent market, which has traditionally been dominated by ICE.

-By Sarah Kent, Dow Jones Newswires;4420-7842-9376; sarah.kent@dowjones.com

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