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Economy Title: Obamanomics strikes again: New York loses oil trade crown to London The IntercontinentalExchange ICE.L, headquartered in Atlanta but known for its European contracts, has increased its share of the major crude and product futures trade to just shy of 49 percent in 2010, having doubled its volume in five years. Trade on long-term rival the New York Mercantile Exchange has also expanded thanks to burgeoning interest in commodities from traders and investors alike -- but not as fast. NYMEX volume rose about 17 percent last year; ICE surged 31 percent. ICE (ICE.N) is now set to claim top spot just 10 years after it bought the old International Petroleum Exchange IPE.L with backing from some of the world's biggest banks and energy traders, including Goldman Sachs (GS.N) and BP (BP.L)(BP.N). The shift in power is not completely unexpected: traders have been warning for several years that big investors could move money out of the United States to avoid a tough regulatory crack-down now underway. What's surprising is that most participants say that's not the main reason for the shift. "Rising volume and open interest on Brent is a clear signal from the managed risk segment of the market that it's becoming 'the barrel of choice'," says Michael Guido, director of hedge fund energy sales at Macquarie bank in New York. He expects more clients to favor it in the coming years. "Its key attractions are its physical peg and a direct link to Asian demand." And while ICE has benefited from the well publicized attraction to Brent crude as a better global benchmark than U.S. WTI contract, it has also gained from a huge rise in trade of its gas oil contract used for hedging (and speculating on) distillates such as diesel and jet fuel. Soaring demand in Asia for industrial fuels helped boost gas oil trade by 45 percent on ICE in 2010 alone. ICE trade of Brent was also up 35 percent while its WTI contract volume rose 13 percent. David Greely, head of energy research at Goldman Sachs in New York, said the ICE gas oil contract based on delivery into northern Europe gave it a key advantage over NYMEX. "Gas oil is the most exposed of any oil product future to emerging market growth," Greely said. "It's heavily leveraged to what's happening in China and other emerging economies in Asia, where diesel is in high demand." By contrast, NYMEX saw volume on its heating oil contract drop by a fifth last year due to uncertainty around looming changes to the contract's specification. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Spreadsheet of traded volumes on ICE and NYMEX: r.reuters.com/fuz77r Graphic on Brent premium to WTI: r.reuters.com/guz77r Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: Happy Quanzaa (#0)
So. Let me get this strait. Because London is paying more for oil than the USSA, we've lost the title? 8D
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