BNP Paribas shuts Singapore oil trading desk

SINGAPORE (Reuters) - French bank BNP Paribas has shut its Asian oil derivatives trading desk in Singapore and relocated the three-men team to London, due to the sluggish trading environment, industry sources said on Tuesday.

Two traders were transferred last month and the third will be relocated soon, they added.

"Until last year, Asia was still a business growth area. It is not anymore," one industry source said.

A company spokesman could not be immediately reached for comments.

BNP Paribas, a leader in oil trade financing in Asia, is still expanding its sales and marketing operations in this region, another source said.

The bank's decision to relocate its oil derivatives operations, launched about three years ago, came as record-high prices and higher volatility are increasing trading risks and costs, prompting companies to limit volumes traded.

"The situation is especially hard in Asia, which is a small market, where too many banks arrived in the past two or three years," the first source said.

Dutch-Belgian bank Fortis, which brought at least two traders on board last year in Singapore with plans to open a derivatives trading desk, gave up on the idea this year and instead relocated its traders last month to Houston.

The oil broking business is also facing a shake-up. Singapore's top oil broker, Radix Energy, was bought this year by two units of U.S.-based Cantor Fitzgerald for $10-$15 million, UK-based GFI Group and Spectron Group set up a joint venture in Singapore in 2007 for oil products broking and Tullet took over Prebon's global oil broking business two years ago.

(Reporting by Maryelle Demongeot; Additional reporting by Chua Baizhen; Editing by Ramthan Hussain and Clarence Fernandez)