Shanghai: China launched yuan-denominated oil futures contracts on Monday, marking the first time foreign investors will have access to Chinese commodity futures as the world's top crude importer seeks greater influence over global prices.
The long-awaited contracts are traded on the Shanghai International Energy Exchange at price of 432.3 CNY per barrel (68.47 USD) for delivery in September.
Around 42,336 lots of crude futures contracts have changed hands so far, of which around 40,656 lots were September contracts as of the end of the afternoon session at 3 pm, accounting for 96% of the total traded volumes, data from INE's website showed.
"First-day trading of new contracts was expected to be active, but it was just a first step for China to gain pricing power", said Huang Lei, an independent commodity futures market analyst. The US dollar is the predominant settlement currency for oil futures contracts.More news: High-ranking Michigan State official arrested amid Nassar probe, sheriff says
Hedge funds and other money managers raised their net long U.S. crude futures and options positions in the week to March 20 after two weeks of cutting bullish bets, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
U.S. West Texas Intermediate (WTI) crude futures were at $65.63 a barrel at 0700 GMT, up 8 cents, or 0.1 percent, from their previous settlement.
Brent crude futures were at $70.34 a barrel, up 22c, or 0.3%.
The comments by the China Iron & Steel Association (CISA) came after the European Union initiated a probe on Monday into imported steel in response to the USA tariffs, anxious that steel manufacturers subject to the tariffs may divert their products to Europe. China is the world's biggest oil consumer, with eyes on rival benchmarks Brent and WTI as well as the United States currency.
Asia, despite being the world's biggest and fastest growing oil consumer, has so far not had a benchmark.More news: Karnataka poll dates to be announced by Election Commission today
"China surpassed the U.S. to become the world's largest importer of crude in 2017".
Martin said he expects a "gentle" start from overseas, though, because foreign investors have to overcome some regulatory hurdles in gaining access to the market.
The current global standards are London-trade Brent futures, and West Texas Intermediate (WTI), which is traded in NY.
"The government (in Beijing) seems determined to support it, and I hear a number of firms are being asked or pressured to trade on it, which could help", said Jeff Brown, President of energy consultancy FGE.
About 19 foreign brokers had registered to trade the contracts as of last week, the exchange said.More news: Sierra Leone: Court puts break on presidential runoff