NYMEX and ICE are working feverishly on competing Middle East sour crude contracts, both set to launch in the next 3-4 weeks. The nature of the contracts reflects the differing philosophies of the two exchanges. NYMEX represents the old-school physical commodity, while ICE tends to list cash-settled instruments.
ICE's contract will be financially-settled, with final settlement based on Platts' Dubai spot assessment, the existing benchmark for Asian crude trading. NYMEX's Oman contract will be physically-delivered.
A couple of key factors could determine which contract will "win". First, will financial players be more comfortable trading the ICE financially-settled instrument that more closely resembles the already-existing Dubai swaps market? Second, will government influence, in the form of tying contract prices to the physically-delivered Oman contract, force commercial traders (and eventually financial firms) in the direction of NYMEX?
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