Jet fuel futures task force established

The Dubai Mercantile Exchange (DME) and an Emirates National Oil Company (Enoc) subsidiary have signed a memorandum of understanding to sell jet fuel futures next year. The futures will be traded on the DME, based in the Dubai International Financial Centre (DIFC).

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By  Barbara Cockburn Published  December 19, 2006

The Dubai Mercantile Exchange (DME) and an Emirates National Oil Company (Enoc) subsidiary have signed a memorandum of understanding to sell jet fuel futures next year. The futures will be traded on the DME, based in the Dubai International Financial Centre (DIFC). Enoc Supply & Trading and DME are combining the DME’s industry expertise with Enoc’s experience and infrastructure in the refining and marketing of jet fuel. “This is a ground breaking initiative and we are delighted to join together with the DME to explore the development of the first ever jet fuel futures contract,” said Hussain Sultan, Enoc’s chief executive. “Enoc has extensive expertise in this area and we are well placed to work with the DME and collaborate with the jet industry to create a successful, liquid risk management tool for the airline industry, refineries and other energy players.” Views on hedging in the local aviation industry are varied. Gary Chapman, president, group services, Emirates Airline, said: “We don’t buy jet fuel futures in Singapore because it is so expensive. So if Dubai can come up with something that’s transparent and liquid enough, we’re interested. We hope to be part of DME’s working group that decides on the contracts.” Qatar Airways does not hedge and appears reluctant to do so. A spokesman for the airline said: “The degree to which airlines achieve protection from rising fuel prices differs greatly and depends on the airlines.”

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