Treasury Secretary Steven Mnuchin said on Fox News that he's optimistic the US can reach a truce with China on trade.
The two major U.S. dollar-based oil benchmarks, Brent in London and West Texas Intermediate (WTI) in NY, traded at US$70.95 a barrel and US$66.42 a barrel respectively.
At 1100 GMT, ICE May Brent crude futures were down 21 cents/b from Tuesday's settle at $69.90/b, while NYMEX May light sweet crude contract was 50 cents/b lower at $64.75/b.
It previous year surpassed the USA as the world's biggest buyer of foreign oil. Thus, the contracts may not only help to win some control over pricing from the major worldwide benchmarks, but also promote the use of Chinese currency in global trade. "With this launch, the market will pay more attention to China's demand story".
The first trading session saw a total of 62,500 contracts with more than 62 million barrels of crude traded for a notional volume of almost 27 billion yuan ($4 billion), Zerohedge reports. About 15,000 contracts had changed hands as of 11:30 a.m. local time.
"The emergence of a new financial oil price benchmark in Asia has been long-awaited and may prove to have a significant influence over the oil markets in the years to come".
To attract more participation, China plans to waive income taxes for overseas individuals and institutions. According to the Shanghai International Energy Exchange data, 19 foreign brokers have registered for oil contracts during the last week. The global benchmark traded at a $4.56 premium to WTI.
Despite this, there were concerns over regulatory interference, as seen in other Chinese commodities like iron ore and coal. Such obstacles kept foreign investors away from the major stock and bond markets in the mainland. This compares with global turnover of more than $10 trillion in worldwide oil futures, the world's biggest commodity market.
The yuan-denominated contract will also help Beijing's efforts to internationalise the nation's currency, said Woodmac's Gupta.
While he's not particularly watching it closely for the moment, ANZ's Chinese desk is very focused on it, he added.
Yang Xiaoping, president of BP China, said China's crude oil futures offer companies in the real economy a hedging tool that can better reflect market conditions in Asia. "For the moment it is looking like both WTI and Brent are stalling", said Greg McKenna, chief market strategist at futures brokerage AxiTrader.