China has launched the highly anticipated yuan-backed crude oil futures in Shanghai, aiming to dethrone rival benchmarks Brent and WTI as well as the U.S. currency (Dollar).
Trading of the new oil futures contracts for September settlement started on the Shanghai International Energy Exchange at 440.20 yuan ($69.70) per barrel, reports Chinese daily the South China Morning Post.
Some 18,540 lots have reportedly been sold and purchased so far. Glencore, Trafigura, and Freepoint Commodities were among the first to buy the new contract, Reuters reports.
Within minutes of the launch, the price had gone up to almost US$70.85 (447 yuan) per barrel. The overall price jump for the short trading session came in at 3.92 percent.he long-awaited step evoked a surge in global prices for oil with Brent Crude soaring to $71 a barrel for the first time since 2015.
U.S. crude benchmark West Texas Intermediate (WTI) reached the highest level in three years at $66.55 per barrel, before retreating to $65.53.
Experts see China’s yuan-dominated contracts as historic as the new futures symbolize the first time that foreign investors can access a Chinese commodity market. The launch ends years of setbacks and delays since the country’s first attempt at listing the securities in 1993.
At the same time, the petro-yuan launch is seen as a blow to the U.S. dollar that has been weakening in recent months. The U.S. dollar is the predominant settlement currency for oil futures contracts. On Monday, the greenback slipped to a 16-month low against the Japanese yen, but remained steady against a basket of six major currencies.
Last year, the country outpaced the United States as the world’s number one importer of oil.