File photo: VCG
Bank of China (BoC) said on Wednesday that it had suspended transactions to open new positions for its crude oil futures trading product from Wednesday onwards, following other banks in curtailing their energy product offerings.
Known as the crude oil "bao," or treasure, the structured product is sold by BoC to individual customers and is linked to domestic and foreign crude oil futures contracts, including the West Texas Intermediate (WTI) and Brent contracts.
The move came in light of "current market and delivery risks," BOC said in a statement.
Oil markets suffered turmoil this week after the U.S. WTI futures collapsed below 0 U.S. dollars 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 37.63 U.S. dollars a barrel as desperate traders paid to get rid of oil.
BoC had earlier suspended trading in both of its U.S. crude oil contract products for one day on Tuesday.
Global oil benchmark Brent crude has fallen 72 percent this year because of the impact of the coronavirus pandemic on the global economy 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.
Industrial and Commercial Bank of China last month adjusted the bid-ask spread for trading on global crude oil after prices fell to a 17-year low.
Chinese mutual fund houses also restricted or suspended subscriptions in outbound oil and gas related funds following the plunge in oil prices.