Japan, South Korea and China fuel trade at DME

Energy consumers in the Far East – particularly Japan, China and South Korea are playing a crucial role in the rise in number of open interests and futures contracts traded at the Dubai Mercantile Exchange (DME) oil industry insiders said. The DME Oman Crude Oil Futures Contract has grown to be the largest physically traded contract in the world and achieved a record delivery of 13.4 million barrels in April 2010, surpassing the previous high of 11.6 million barrels set in September 2009. In February this year, the Exchange achieved a new record total open interest of 19,867. "Most of the physically delivered crude traded at the DME is heading towards Far East Asian countries, particularly Japan and South Korea," a Singapore based analyst said. An estimated 33 per cent of the Oman crude traded at the exchange heads to China, about 17 per cent of it to Japan and about 10 per cent to South Korea. Japan and South Korea need to import an average of about five million and three million barrels of oil daily according to the US Energy Information Administration (EIA). The DME has long said that it wants to be the most sought after oil benchmark in the East of Suez demand basin. The Dubai-based exchange has been vying to tap firms such as Saudi Aramco to price their oil for sale in Asian markets in accordance with the DME benchmark. Traders consider open interests a better indicator of the health of the exchange for it "suggests" confidence in the exchange.