In January, Saudi Arabia will be able to call the bluff of at least some speculators, defined as traders and who buy and sell futures contracts without any interest in owning the underlying physical commodity.

That is because the NYMEX has announced plans to launch a cash-settled futures contract tracking the Argus index by the end of this year, and soon afterwards a contract for physical delivery of sour crude. The delivery point for the physical crude contract will be on the US Gulf Coast.

SHOOT: Remains to be seen if this will work.

clipped from www.thenational.ae With oil prices thoroughly decoupled from the fundamentals of supply and demand, Saudi Aramco has decided it is time to nudge the market towards reality. Last week, the world’s biggest oil company said that as of next January, it would use the Argus Sour Crude Index instead of West Texas Intermediate (WTI) crude as the benchmark for pricing all grades of Saudi crude sold to US customers. Why that would make a difference takes some explaining, but it boils down to a decision to link Saudi crude sales to a market that the state-owned Aramco can influence through the number of tankers it dispatches towards the US coast. “The Saudis are figuring out they are losing too much money on the volatility of the WTI contract,” Carl Larry, the president of the Houston consultancy Oil Outlooks and Opinions, told Reuters. “There are too many speculators pushing the market around and it’s becoming too hard to keep track of the real value of crude.”