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What foreign traders worry about Cruden Oil Futures

Fang submitted 2018-05-30 19:05:56

Some foreign traders may be deterred by

1. China's shorter trading hours,
——INE SC: 9:00-11:30 + 13:30-15:00 +21:00-2:30(T+1)
While CME WTI: 7:00-6.15(T+1)
ICE Brent: 9:00-7:00(T+1)

2. The requirement to settle by physical delivery only (not cash),
——This is in contrast with Brent which has an option to cash settle.

3. Risk of government interference,
——China want to prevent a speculative bubble in the crude futures and deter excessive price swings

4. Different trading habits
——a difference between Chinese and foreign commodity futures participants is that Chinese do not typically trade steadily over the months.

5. A higher storage rate on delivery warehouses.

——Crude storage costs in China at levels that are at least twice the rate elsewhere. Discourage speculators interested in conducting so-called cash and carry trades, which seek to take advantage of differences between the spot price and futures of a commodity.


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