New York, 16 November 2009 

Sour crude could gain wide acceptance as a benchmark oil in the future, perhaps trading as widely as light, sweet grades including West Texas Intermediate (WTI), CME Group Inc managing director Bob Levin said Friday. 

CME, the exchange operator that controls the New York Mercantile Exchange, believes that contracts based on U.S. sour crudes could gain acceptance over time, sharing the stage with top oil markers such as WTI and Brent.

NYMEX's light sweet crude contract, the most traded in the world, is based on the low-sulphur specifications of WTI, while sour crudes are more sulphuric.

"If they take off, they are going to be comparable to other major benchmarks, with hundreds of thousands of contracts traded every day," Levin said in a phone interview.

"But that's looking well into the future. First, they'd need to gain liquidity and acceptance."

The comments come as CME and its smaller, Atlanta- based competitor, InterContinental Exchange, have each unveiled new derivative contracts to be launched in coming weeks, based on the Argus Sour Crude Index (ASCI), a trade-weighted index of highersulfur crude produced in the U.S. Gulf.

ASCI is sparking wider interest as a pricing benchmark after Argus Media said last month that Saudi Arabia, the top oil exporter, would begin in January to price its oil exports to the United States against an ASCI basis instead of WTI.

An Argus executive later told Reuters that other exporters are considering adopting ASCI for pricing as well. The value of ASCI, based on average prices for Mars , Poseidon and Southern Green Canyon crude flows, is still expressed in a differential to WTI, the light, sweet benchmark, and Argus has said it does not intend for ASCI to usurp WTI's role as a key benchmark.

But Levin said the oil industry may benefit from new sour benchmarks over time, since they could help reduce the risks inherent in hedging physical supplies of heavy and sour crudes with WTI contracts, whose underlying commodity has different specifications.

"This isn't about substituting one benchmark with another," he said. "The question is whether it's possible to bring a new benchmark to work hand in hand. The absence of one has introduced basis risk."

NYMEX light, sweet crude fell 59 cents to settle at $76.35 a barrel on Friday.

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