ICE Low Sulphur Gasoil is the go-to price marker for the middle part of the refined barrel and the world’s leading middle distillate benchmark for the oil market.
Gasoil is so called because during the refining process it moves literally from being gas condensing on the chamber to a liquid. It sits in the middle of the range of densities in the barrel and is made up of products such as Jet, Heating Oil and particularly Diesel.
The ICE Low Sulphur Gasoil contract has therefore become an important and efficient hedging and trading mechanism, providing market participants with access to a whole range of products in a single contract.
Today, ICE Low Sulphur Gasoil plays the same role for middle distillate oil that ICE Brent Crude plays for the crude oil market.
As an established global benchmark, the contract has proven its value in helping participants adapt to evolving global markets and enabling price discovery for oil market participants around the world.
WHO TRADES LOW SULPHUR GASOIL FUTURES?
The highly liquid ICE oil markets continue to attract a wide range of users, from commercial participants and producers to asset managers and pension funds.
Entities with exposure to the underlying physical market for the commodity which use the futures market to hedge the risks associated with such exposure. “Commercial” participants. Examples would include oil exploration and drilling firms, specialist commodity trading firms with physical exposures, producers, exporters/importers, coffee roasters, cocoa processors, sugar refiners, food and confectionary manufacturers, millers, crushers or utility companies who consume oil to generate power.
Entities dealing primarily in “swap” or other Over The Counter (“OTC”) transactions in the commodity in question and who use the futures market to hedge this exposure. Examples would include investment banks and other complex financial institutions
Entities managing futures trading on behalf of clients; investment firms. Examples include hedge funds, pension funds, registered US commodity trading advisors or commodity pool operators.
Every other reportable trader. Examples would include proprietary (multi-asset) trading houses, algorithmic traders and local traders.
This is a balancing figure and consists of the total reportable long, short and spreading positions subtracted from the overall open interest figure for the commodity.
Mike Davis talks about the importance of Low Sulphur Gasoil as the global benchmark for diesel
2017: A Dynamic Market Landscape
By Mike Davis, Director of Oil Market Development at ICE
When it comes to trading in the oil markets, it’s all about liquidity. And, when it comes to measuring how liquid a futures contract is, open interest is one of the key indicators used by market participants.
How ICE Low Sulphur Gasoil Futures became One in a Million