April 20, 2007 / 7:45 PM / 12 years ago

NYMEX calls rival's Dubai contract a "copy cat"

NEW YORK, April 20 (Reuters) - The New York Mercantile Exchange NMX.N (NYMEX) lashed out on Friday against the IntercontinentalExchange (ICE.N), calling a Middle East oil futures contract that its rival plans to launch a “copy cat”.

In a surprise announcement on Thursday, ICE Futures said it would launch a Middle East sour crude oil futures contract on May 21, days before a NYMEX joint venture starts a long-awaited Omani crude contract.

The two exchanges hosting the world’s leading oil futures contracts have been locked in a long-running rivalry for years and both are racing to establish a benchmark contract linked to the Middle East sour crude market.

In a statement issued in New York on Friday, NYMEX said the cash-settled ICE contract is not comparable to the physically settled Oman crude oil futures contract to be launched June 1 by the Dubai Mercantile Exchange (DME), a joint venture of NYMEX, Dubai and Oman.

“The ICE contract is a copycat of the Dubai crude oil calendar swap futures contract that NYMEX launched in 2002 on NYMEX ClearPort,” added NYMEX.

It said the NYMEX Dubai crude oil calendar swap futures contract currently has open interest of more than 22,000 contracts.

Both NYMEX and ICE Futures have in recent years launched products aimed at each others markets. ICE is host of Brent futures LCOc1, the European benchmark, but NYMEX also offers a Brent crude contract and both also carry futures contracts for the benchmark U.S. crude, West Texas Intermediate (WTI).

ICE Futures said on Thursday its Dubai contract would be based on the price of physical Dubai crude assessed by oil industry pricing agency Platts. It said the launch was pending UK regulatory approval.

DME had said on Thursday it had deferred launching its Oman futures by one month to June 1 pending regulatory approval.

REGIONAL BENCHMARK

In its statement, NYMEX said DME and its upcoming contract have the strong support of the Dubai and Oman governments, adding the contract is widely supported as a benchmark for the region by the international energy and trading communities.

The Middle East has more than half of the world’s petroleum reserves and accounts for more than a third of global output.

NYMEX Chairman Richard Schaeffer said the new ICE contract is in no way comparable to the DME’s flagship Oman crude oil futures contract.

“The DME contract will serve as a benchmark to fill a time zone gap in trading between Europe and Asia with a product that addresses the growing needs of the regional market,” Schaeffer said in the statement.

“For the past three years, we have worked closely with the Dubai and Oman governments to create a physically delivered contract that they deem appropriate to become the globally recognized benchmark,” he said.

“We look forward to the June 1 launch, subject to obtaining all regulatory approvals.”

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