CME Launches New Brent Crude Futures Contract

CME Group Inc. (CME) Monday launched a new Brent crude futures and options contract in a bid to challenge IntercontinentalExchange Inc.'s (ICE) dominance in the market.

However, analysts said that CME was unlikely to seriously dent ICE's hold on the Brent market, even if it initially attracted more interest because of its earlier start date.

The first tradable month on CME's Brent 25-day contract will be Feb 2012, while the first month for ICE's Brent NX contract is December 2012.

"On the new contract at least they could start with a little more liquidity than in the ICE contract," said Olivier Jakob, managing director of Swiss consultancy Petromatrix.

"But I still think it's always the same when you launch a new futures contract. Liquidity is in the old contract and it takes a while to move to the new one," he added.

In the week since ICE launched its Brent NX contract, trade has been very limited, traders said. A spokesman for CME said that no trades had yet been done in the CME 25-day contract early Monday.

The move to new contracts by CME and ICE come ahead of planned changes to the way Brent is assessed in the physical market.

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.

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

CME (NASDAQ:CME)
Historical Stock Chart
From May 2024 to Jun 2024