International Petroleum Exchange (IPE)
What is the International Petroleum Exchange (IPE)?
The International Petroleum Exchange (IPE), laid out in 1980, was a London-based exchange for futures and options on several energy-related commodities. It has been a subsidiary of the Intercontinental Exchange (ICE) since being purchased in 2001 and is currently known as ICE Futures.
Understanding the International Petroleum Exchange (IPE)
International Petroleum Exchange (IPE) was one of the main markets for the trading of energy options and futures. It became known as the ICE Futures after its purchase by the Intercontinental Exchange in 2001. The new, ICE, has expanded its portfolio of futures offerings to incorporate different energy products, including natural gas and power.
The primary commodity traded through IPE was Brent crude, which, at that point, was the global benchmark at oil costs. Different trades the exchange handled remember options and futures for oil, natural gas, power, coal, and fuel oil, as well as European fossil fuel byproduct credits. Today, ICE futures keeps on taking care of these trades as well as further developed derivatives and exotic options.
In 2005, the exchange moved from a open outcry system, where the floor traders execute orders with a system of hand signals, to an electronic trading system. Major contenders are the New York Mercantile Exchange, or NYMEX, and the Chicago Mercantile Exchange.
The International Petroleum Exchange, established in 1980 by a group of energy and futures traders, was purchased in 2001 by the Intercontinental Exchange (ICE). The petroleum industry experienced extraordinary volatility during the 1970s, due to political and military contentions in the Middle East. The disruption in the global petroleum markets sent U.S. gasoline prices taking off, and its effects spread to different corners of the global economy.
Future Contracts were IPE's Bread and Butter
Futures contracts on underlying petroleum supplies permit producers and consumers to hedge their positions and safeguard themselves against future volatility. A futures contract is a legal agreement between two gatherings to exchange a settled upon asset for a settled upon price at a date from here on out. The seller representing things to come has a short, or bearish perspective on the price heading for the underlying asset. Conversely, the buyer has a long, or bullish view. Futures contracts are quoted in U.S. dollars and pennies and communicated in loads of 1000 barrels.
A consumer of raw crude oil who is stressed over a future spike in crude prices could buy a contract (long) to purchase crude at a lower price. Any such agreement must incorporate a counterparty who takes a short position. Naked short positions open traders to critical risk on the off chance that they need to go to the market to purchase oil to deliver to the long contract holder.
Notwithstanding the oil producers and consumers active in futures markets for hedging, speculators have joined the markets looking for profits from developments in oil prices. As opposed to seeking to safeguard themselves from the vulnerability of future prices, these traders try to capitalize on their forecasts of price developments. While these individual trades on affect underlying commodity prices, large numbers of speculative trades can lead to price developments. Numerous scientists accept that oil speculation contributed to the sharp rise in oil and gas prices in 2006.
Features
- The primary commodity traded through IPE was Brent crude, which, at that point, was the global benchmark at oil costs. Different trades the exchange handled remember options and futures for oil, natural gas, power, coal, and fuel oil, as well as European fossil fuel byproduct credits.
- International Petroleum Exchange (IPE) was one of the main markets for the trading of energy options and futures. It became known as the ICE Futures after its purchase by the Intercontinental Exchange in 2001.
- In 2005, the exchange moved from a open outcry system, where the floor traders execute orders with a system of hand signals, to an electronic trading system. Major contenders are the New York Mercantile Exchange, or NYMEX, and the Chicago Mercantile Exchange.
