Interest in crude oil trading in Dubai is on the rise, according to UAE clearing broker Trust Securities, a member of the Dubai Gold and Commodities Exchange (DGCX).
There were 2,410 West Texas Intermediate (WTI) crude futures contracts traded on the DGCX in February, up 31 per cent since January.
“The activity levels on DGCX have gone up significantly since crude prices have gone up. Oil is moving into highs,” says Bruce Powers, head of research at Trust Securities.
“Oil is trading with a risk premium due to geopolitical uncertainty that has the potential to disrupt the flow of oil.”
Recent threats by Iran to block the Strait of Hormuz export route, which accounts for about 20 per cent of the world’s oil supply, have pushed up the price of oil per barrel.
“Recent price action in the oil market points to higher prices over the coming months. The upward trend in prices continues to progress in an orderly bullish fashion,” says Powers.
According to Powers, there is a correlation between the rise in oil prices since October 2011and the rise in global equity markets, which indicates that higher liquidity provided by central banks and a more positive economic outlook are contributing factors.
Oil is currently trading at $107.83 a barrel.