China’s yuan-denominated crude oil futures launched today in Shanghai with 15.4 million barrels of crude for delivery in September changing hands over two and a half hours—the length of the first-day trading session for the contract.

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) from a starting price of US$69.94 (440.4 yuan) per barrel. The overall price jump for the short trading session came in at 3.92 percent.

Many awaited the launch eagerly, seeking to tap China’s bustling commodity markets, although doubts remain whether the Shanghai futures contract will be able to become another international oil benchmark. These doubts center on the fact that China is not a market economy, and the government is quick to interfere in the workings of the local commodity markets on any suspicion of a bubble coming.

To prevent such a bubble in oil, the authorities made sure the contract will trade within a set band of 5 percent on either side, with 10 percent on either side for the first trading day. Margin has been set at 7 percent. Storage costs for the crude are higher than the international average in hopes of discouraging speculators.

Source: https://oilprice.com/Energy/Crude-Oil/China-Yuan-Futures-Launch-With-A-Bang.html