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ICE BRENT CRUDE FUTURES, 25 DAY BFOE
& DATED BRENT CONTRACTS

AN EXPLANATION & AN ANALYSIS OF RELATED CREDIT RISK

Ron Wells

BACKGROUND

ICE Brent Crude Futures

ICE Brent Crude Futures and related contracts are traded on the IntercontinentalExchange’s ICE Futures Europe platform, based in London. This market venue was founded in 1980 as the International Petroleum Exchange (IPE).  The IPE operated as an ‘open outcry’ exchange until April 2005.  It was purchased by IntercontinentalExchange (www.theice.com) in 2001.  Its name was changed to ICE Futures Europe to coincide with the switch from open outcry to trading on an electronic platform in 2005. 

To learn more click here.   A picture of the first page of the written explanation appears below.  A copy of the Article and PowerPoint slide presentation is available:

 

The Contractual Arrangements for Brent Cargoes:

Click the icons below to read:
1. the Shell GT&Cs for Crude Oil contracts 2010 Edition or
2. the Agreement for Sale of Brent Blend Crude Oil (SUKO 90) 15 Day version and
3. the Modifications to SUKO 90 amending the Agreement for the introduction of 25 Day basis.

NB: Either 1 or 2 as amended by 3 will apply to an OTC contract arising out of an EFP.

1. 

2.
 

3. 

ILLUSTRATIONS

Click the picture below to obtain a copy of the Article and the linked PowerPoint slide presentation, the latter includes illustrations that further clarify some of the information provided in the written explanation.

NOTES:

1.  API Gravity = American Petroleum Institute gravity, which is a measure of how heavy or light a petroleum liquid is as compared to water at 60 degrees Fahrenheit .  If greater than 10 the liquid is lighter than, so floats on water.  Light Crude = higher than API 31.1.  Medium Crude = between API 22.3 and API 31.1.  Heavy Crude = below API 22.3.  Extra Heavy Crude = below API 10.0

2.  Over the Counter (OTC) = A direct transaction with a disclosed counterparty; that is to say, not a transaction through the intermediation of an exchange.

3.  Dated (DTD) Prices = Prices applicable to crude oil cargoes to be delivered during this current month. Such cargoes are also referred to as ‘spot cargoes’ or ‘prompt cargoes’.

 

 

Disclaimer:
The information provided in this article and the related PowerPoint slide is derived from sources believed to be accurate and reliable. SUCH INFORMATION IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND AND RON WELLS AND/OR HIS ASSOCIATE(S) MAKE NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THIS INFORMATION. Under no circumstances do Ron Wells and/or his associate(s) have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error or other circumstance or contingency within or outside the control of Ron Wells and/or his associate(s) in connection with the procurement, collection, compilation, analysis, interpretation, editing, transcription, transmission, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory, or incidental damages whatsoever (including without limitation, lost profits). December 2012. 
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Last Updated:  January 02, 2017 17:12 -0000