Mumbai, Nov 18: With crude oil trading at a record
high, investors' interest in the commodity in the domestic
market has also increased substantially.
The average daily volume of crude oil futures on Multi
Commodity Exchange (MCX) has more than doubled to 5.2 million
barrels till October 31 this year, from 2.5 million barrels in
FY 05, a top exchange official said.
The volume in crude oil contracts on MCX has witnessed
all-time high of 11-million barrels with open interest of 2.14
million barrels on November 1. MCX has an over 95 per cent
market share as far as energy complex is concerned.
"The average daily open interest for 2005 was
approximately 1.3 million barrels, which has increased to over
1.6 million barrels in 2007. This is an indication of
increased participation in the crude oil futures wherein all
types of participants take positions to take advantage of the
volatility in crude oil prices," MCX's Deputy Managing
Director, Joseph Massey, said.
Crude oil contracts at MCX clocked a turnover of Rs
323.60-crore on November 16. Volumes were 8,94,200 barrels and
open interest at 10,70,700 barrels. Crude oil December
contract was up by 1.65 per cent at rs 3,633 per barrel.
In the energy segment, all MCX crude oil contracts
registered a turnover of Rs 10,561.09-crore during the week
ended November 16. Open interest was 1,129,500 barrels and
total volume 28,893,000 barrels during the week.
Commenting on recent reports that trading of crude oil on
commodity exchanges should be stopped to cool down prices,
Massey said: "futures ban does not help market pricing. In a
market-driven economy, the market is required to price any
asset, because it is the most transparent and neutral platform
to price an asset."
"This can be applied to any market-related activity, like
commodities, securities and foreign currencies," Massey said.
As crude oil approaches the USD 100-a-barrel mark in
international markets, Petroleum Secretary M S Srinivasan had
suggested halting trading of the fuel on commodity exchanges.
Trading on bourses like the New York Mercantile Exchange
is contributing "enormously" to high prices, he had said.
Crude oil is one of the most important sources of energy
today with over 40 per cent of the world's energy demand being
met by crude oil. Prices of crude oil are characterized by
demand-supply equations, geo-political issues, weather
conditions, currency factors and economic conditions in
consuming nations.
"Various participants use energy contracts for their
corresponding requirements in India. Producers use them to
hedge against highly volatile prices while consumers use them
to protect themselves against volatile prices of petroleum
products. Refiners use them to protect their margins," an MCX
official said.
Bureau Report