Chinese Fuel Oil Futures Market Analysis

The futures market is the high-class component of the capital market. The futures trading has developed speedily in past one and a half century after the first futures exchange of the world founded in Chicago America in 1848. The function of price discovering and evading risk by hedging became perfect gradually. To judge the validity of a futures market mainly depend on if the risk of the actuals market can transfer to the futures market.Oil is the blood of Industry, important strategic materials and safety dependence of a country. China became the second oil consuming country from 2003, and imported a great deal of crude oil and oil production. We consult the weighted average price of New York. Rotterdam and Singapore when import aboard. The price was restricted by other countries, and lagged the international market about a month, so we often suffer great economic losses. The essential reason lies in that we have not the "price making right" matching with the status of big importing and consuming country. The only path of creating the international price making center is to establish and develop our own oil futures market. According to the treaty of entering WTO, we will open the retail and wholesale market of crude oil and step by step. Then the risk of our country's oil safety will expose completely.The Fuel Oil is one kind product of oil production, widely used in power plant, ceramics producing and so on, and is the second production we import, which only less than crude Oil. The extent of market is high and the importing quota was cancelled in 2004. so Fuel Oil is now in lines with the international market and almost a complete market in China. But the Fuel Oil price making is consulted by Singapore Platt's price and can't reflect the supply-demand relation truly. Because of this, The Fuel Oil futures contract was authorized by China Securities Regulatory Commission and went to the market in 25 Aug 2004, on the one hand to evade the price waving risk, on the other hand to accumulate experience for other oil production futures contract.Run more than a year, the Fuel Oil futures has gained a lot of effects. In...