Nymex starts building Central European oil futures market

The New York Mercantile Exchange (Nymex) has recently agreed with the Budapest Stock Exchange and the Budapest Commodity Exchange to develop the first crude oil futures contract to be traded in Hungary.

This will be based on oil from the Russian Urals and carries out a plan originally announced in 1996 to develop an energy futures exchange in central Europe.

Previous attempts had hung up on reaching an agreement for contract specifications for Urals crude because it trades at a discount due to a higher sulphur content than other crudes, such as North Sea Brent.

But with production in the Urals increasing to around 4 million barrels per day, more than Brent’s hundreds of thousands of barrels per day, the time seems to have come to establish a central European oil futures market.

One drawback to establishing such a market, however, is the small numbers of both energy companies and investors in the region. Nymex also plans to open a trading floor in London later this year and also has plans to begin trading in Dubai and Tokyo.

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