SHANGHAI crude oil futures launched yesterday with mom-and-pop and institutional investors fuelling much higher turnover than many expected for China’s new commodity benchmark that is aimed at dominating the Asian market.

In a sign the contract has lured overseas interest, global commodity trader and miner Glencore and big merchants Trafigura and Freepoint Commodities were among the first to trade, although regulatory hurdles and unfamiliar rules may stymie broader take-up in the near term.

The launch of China’s yuan-denominated oil futures — its first commodity derivative to be open to foreign investors — marked the culmination of a decade-long push by the Shanghai Futures Exchange (ShFE) to give the world’s largest energy consumer more power in pricing crude sold to Asia.

Almost 15.4 million barrels of Shanghai’s most-active September contract changed hands in the 2-1/2-hour morning session to 11:30 a.m. (0330 GMT). That initially eclipsed volumes traded in the Brent May contract, before Europe’s benchmark came alive around 0500 GMT.

Yuan-denominated trading and a blend of new rules and regulatory burdens will also likely hamper initial take-up on the Shanghai International Energy Exchange (INE), sources involved in the launch said.

Still, China offers the potential for a deep, liquid market, buoyed by an explosion of interest from mom-and-pop investors that has supported its vast commodities derivative markets from apples to iron ore in Shanghai, Zhengzhou and Dalian.

What was a surprise to many was that Glencore — not a Chinese oil major — executed Shanghai’s first crude deal. Swiss-based commodity trader Trafigura, U.S.-based Freepoint and independent refiner Shandong Wonfull were other early participants.

“Glencore’s first bid reflected the high willingness to participate and enthusiasm of foreign traders for Chinese crude oil futures,” said Yang Xidong, general manager of Xinhu Futures Co.

The early involvement of big international players was a morale boost for the fledging market, but domestic oil majors are expected to provide a significant amount of liquidity in the long term.

“We were active with Glencore today and I’ve seen Trafigura in it and Freepoint ... We take the view that the contract is viable, adds to the crude oil trading value chain, and is here to stay,” said Kevin Tan, executive vice president at brokerage Straits Financial Services. (SD-Agencies)