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April 23, 2020

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Home » Business » Energy

BOC halts trading in ‘oil treasure’

Source: Agencies | 00:00 UTC+8 April 23, 2020 | Print Edition

THE Bank of China said yes­terday it had suspended transactions to open new posi­tions for its crude oil futures trading product effective imme­diately, following other banks in curtailing energy products.

Known as crude oil “bao,” or treasure, the structured product is sold by BOC to indi­vidual customers and is linked to domestic and foreign crude futures, including West Texas Intermediate and Brent.

The move came in light of “cur­rent market and delivery risks,” BOC said in a statement.

Oil markets suffered turmoil this week after WTI futures collapsed below US$0 a barrel on Monday for the first time in history because of a supply glut following a drop in demand amid restrictions to prevent the spread of the coronavirus. Fu­tures fell to minus US$37.63 a barrel as desperate traders paid to get rid of oil.

The BOC suspended trading in both of its US crude oil con­tract products for one day on Tuesday.

Brent crude has fallen 72 per­cent this year because of the impact of the coronavirus pan­demic and after major producer Saudi Arabia started a price war, leading Chinese banks and funds to adjust or limit trad­ing in oil-related products and investments.

The Industrial and Commer­cial Bank of China last month adjusted the bid-ask spread on global crude after prices hit a 17-year low.

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