China oil futures hit record levels

China oil futures hit record levels

Activity in China's oil futures market has risen to record levels as the country seeks to develop the role of its currency in a trade dominated by the US dollar.

Open interest in oil futures on the Shanghai International Energy Exchange (INE), a measure of the total number of contracts outstanding, leapt to a daily average of 118,249 in 2020 “” four times higher than in 2019. Trading volumes climbed more than 20 per cent year on year.

A rise in trading and positions in the contracts, which were launched in 2018, form part of a longer-term push by Beijing to establish renminbi-denominated markets that ultimately seek to challenge the dollar's dominance.

The new market "has done well beyond a lot of people's expectations, including mine“, said Jian Yang, research director at the JPMorgan Center for Commodities at University of Colorado Denver. He added that the market could provide "potentially huge opportunities for promoting global usage“ of the renminbi.

China is the world's largest importer of crude oil “” a role that has intensified thanks to the country's swift economic recovery from the coronavirus crisis. Last year it imported a record 542m tonnes of crude oil, up 7 per cent from 2019.

But its oil