China's INE to add Murban to basket of deliverable crude in 2021

Singapore — China's Shanghai International Energy Exchange (INE) will add Abu Dhabi's Murban crude as a deliverable into its crude futures contract from June 1 next year, the exchange said in a notice on its website Dec. 1.

Murban is the first new grade to be added to the contract since its launch in 2018. The exchange currently has Dubai, Upper Zakum, Oman, Qatar Marine, Basrah Light, Basrah Heavy and Masila as deliverable grades in the contract.

The exchange has set specifications for Murban crude at minimum 35 degrees API and maximum sulfur content of 1.5%. The premium for the grade has been set at Yuan 5/b, or 76 cents/b.

Sources at INE said the exchange will keep monitoring China's import trends for crude grades to adopt necessary adjustments on the deliverable grades in a bid to meet investors' needs for hedging.

"Murban's volume has risen notably in China, moreover, it is not a destination-fixed crude grade and free for trading," an INE source said, referring to traders' ability to get destination-free cargoes from Abu Dhabi's Adnoc for a premium.

UAE was China's seventh crude supplier in January-October 2020, with shipment surging 123.1% year on year to 668,496 b/d during the period, data from General Administration of Customs showed.

Murban and Upper Zakum were the favored UAE crude grades among Chinese refineries.

In the independent sector, imports of Murban rocketed 520% year on year in January-October while Upper Zakum also gained 146%, S&P Global Platts data showed.

In November, China's Rongsheng purchased 4 million barrels of various January-loading sour crude grades, including Abu Dhabi's Murban and Iraq's Basrah Light crude oil grades.

Loading ports for the grade will be either Fujairah terminal or Jebel Dhanna terminal in the UAE.