MCX register record crude oil volume

The Multi Commodity Exchange (MCX), the country’s leading commodity bourse, posted a record volume of 23.49 million barrels in crude oil futures on January 02, 2009. The previous record was of 19.08 million barrels, achieved on December 15, 2008.

Significantly, open interest hit Rs 500 crore benchmark the same day which indicates that a large section of the country’s petrochemical industry players are using MCX platform to hedge their energy risk, said the spokesperson of the exchange.

The volatility in international prices also has its impact on the prices of domestic fuels and has direct impact on the producers, consumers and refiners. This becomes even more pertinent for consumers of petroleum products as the volatility in oil prices get into to the downstream sector. MCX crude oil futures contracts satisfy the need for hedging against the volatility in the prices of fuels like furnace oil and aviation turbine fuel (ATF) also as it has more than 95 per cent correlation with the said products.

 

The increasing liquidity in the MCX crude oil futures will also enable the participation of airline companies to stabilise the fuel cost through crude oil futures.

The fuel used by airlines is a derivative product of crude oil and their prices, accordingly, share a high correlation of more than 95 per cent.

In MCX’s liquid crude oil futures contract Indian airliners have the option to cover their entire fuel price risk at the domestic level without having to expose them to the foreign exchange risk, an analyst said.