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Vitol, Aegean conclude first fuel oil trade on DME

Vitol, Aegean conclude first fuel oil trade on DME
Energy trader Vitol and bunker supplier Aegean Marine Petroleum Network have concluded the first-ever trade in fuel oil derivatives on the Dubai Mercantile Exchange (DME) in the UAE.

The trade completed was for 7,000 metric tonnes of July 180 cst fuel oil between Vitol and Aegean, brokered by Freight Investor Services (FIS) office in Dubai, according to DME.

The exchange recently listed Middle East 180 cst and 380 cst higher sulphur fuel for trading, and the contracts are to be settled against the MOPAG 180 cst and 380 cst assessments provided by price reporting agency Platts.

DME said “the listing allows traders to directly hedge fuel oil delivered in the Gulf region and to trade the important spread between the Middle East and Singapore fuel oil markets”, adding that this is a “significant step towards helping the Gulf realise its full potential as a refined product trading hub.”

Singapore is the world’s largest bunkering port by sales volume while Fujairah port of the UAE has considered itself the second largest bunkering port.

Chris Bake, member of the cxecutive committee of Vitol, said: “Vitol is strongly committed to the development of the Fujairah oil hub and this new derivatives contract represents a big step forward in Fujairah’s evolution from a pure logistics hub into a major trading centre.”
Owain Johnson, managing director of DME, noted that even in volatile times, there is a healthy appetite among regional market participants as a way of managing price risk at Fujairah and the DME is serving this need.

Matt Stanley at FIS said: “Fujairah has become one of the most important trading hubs not just within the Arabian Gulf region but globally as well. Giving the market the ability to hedge fuel oil that is priced on the basis of physical AG quotes will not only serve to manage risk for regional traders but also assist arbitrage opportunities.”