FMCL launches Asian oil forward curve data

Saima Farooqi
02 May 2003

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Risk management

The ‘Asian oil module’ offers extensive forward market curve data on Asian oil swaps by averaging assessments made by the region’s most active Asia-swaps brokers. “Industry participants, including traders, end-users, back-office managers and senior management, have increasingly voiced the need for robust, independent, neutral and accurate forward market curve data,” said FMCL in a statement. “Such data is required for dependable mark-to-market activities, as well as for stimulating market confidence and liquidity on the trading side.”Currently, brokerage houses provide in-house data to clients, but no single brokerage covers the entire market, according to FMCL. It added that brokers do not wish to bear the responsibility of having their proprietary market curves emerge as pricing standards, particularly given the challenges inherent in assessing sometimes illiquid markets. “FMCL’s participating brokers have chosen to combine their data because they recognise that even the most knowledgeable and neutral view of the market is not infallible, and that the only safe approach in producing a market standard is averaging multiple informed, neutral views, in a defined, methodical fashion,” said the company.

FMCL’s methodology involves averaging the assessments of the region’s leading brokers to provide an assessment of the most actively traded swaps grades and time periods. The data for FMC’s Asia oil module is collected from participating member offices in Singapore, Tokyo and London. Brokers electronically input their assessment of the grades they actively cover in the market. These inputs are then averaged and displayed as daily forward market curves for each grade.

The grades include, but are not limited to: crude oil swaps, such as WTI swaps and Tapis swaps; other crude oil grades, such as Brent futures; and refined products swaps, such as Singapore Naphtha swaps and Singapore jet kero swaps.

To ensure a middle view of the market, high and low broker assessments are discarded before averaging.

The founding members of FMCL include the top 10 oil brokerage houses in Asia-related swaps, including Amerex Petroleum Singapore, Aspen Oil (Broking), Ginga Petroleum, Intercapital Commodity Swaps, Prebon Energy (Singapore), PVM Oil Associates, Radix Energy (Singapore), Spectron Energy (Asia), TFS Energy (S), and Starsupply Tullett Energy, as well as Oil Trade Associates which is the management company for FMCL.