ICE confirms delay of Murban futures beyond H1-2020 due to Covid-19 crisis

Singapore — The Intercontinental Exchange on Wednesday confirmed industry rumors that its widely anticipated launch of Murban futures trading in tandem with the UAE would be delayed beyond H1 2020.

The entity cited "fallout from the COVID-19 pandemic" as the main reason for the delay.

"Due to the ongoing situation with COVID-19, we no longer expect to launch ICE Futures Abu Dhabi (IFAD), our new exchange established to launch the world's first Murban crude oil futures contract, in the first half of this year," ICE said in a note Wednesday.

ICE's confirmation of a delay comes after industry sources told S&P Global Platts earlier this year that the launch -- initially touted for Q1 2020 -- was to be delayed beyond the first half of the year.

Then, market sources had cited delays relating to regulatory hurdles as the exchange sought to increase the global outreach of the new futures contract.

"ICE is in active discussions with regulators about the approvals needed to ensure firms located in key jurisdictions including the UK, US and Singapore can access futures contracts traded on IFAD from launch," said an ICE spokeswoman on the subject back in March.

Several industry sources in Singapore and London said that the launch, announced in late 2019, would likely be pushed out to the second half of the year, with some citing August as a possibility.

"We continue to make progress including obtaining relevant regulatory approvals and working with our members and trading participants to prepare for launch. We will communicate further on launch timing as we continue through the process," according to the ICE statement seen by Platts on Wednesday, May 6.

When launched, the futures contract is largely expected to be used as the baseline for setting official selling prices for ADNOC's four crude grades every month.

Presently, the entity issues OSPs as differentials against Platts front-month Dubai crude assessments, a practice it first began in March this year.

ADNOC, which uses benchmark Dubai crude as the basis for selling its cargoes, described its latest move as an interim measure in response to "unprecedented market conditions."

UAE's ADNOC and ICE first announced plans to start a derivatives trading platform in November 2019, to be hosted on a new Abu Dhabi exchange in partnership with nine international energy companies. The exchange, called ICE Futures Abu Dhabi, received regulatory approval from the Abu Dhabi Supreme Petroleum Council shortly after the proposal.

In addition to its flagship Murban futures contract, the ICE-ADNOC alliance intends to launch a full suite of related, cash-settled contracts to allow market participants to boost activity for Murban in step with established trading practices.

ADNOC is partnering with BP, GS Caltex, Inpex, JXTG, PetroChina, PTT, Shell, Total and Vitol to launch IFAD.

Murban, produced from an onshore field in Abu Dhabi, has a total production of approximately 1.7 million b/d, of which 75% is exported, largely to Asia, with Abu Dhabi retaining the balance for domestic refining. The crude, with a gravity of 40.5 API and sulfur content of 0.78%, is considered light sour by Asian refiners.