Since it was launched on the Singapore International Monetary Exchange (Simex) in June 1995, Brent futures have failed to garner even a fraction of the support the same contract receives on the International Petroleum Exchange (IPE) in London, despite Asia's fast growing demand for crude oil.

Trading on Simex has garnered just a few hundred lots per day compared with 55,000 on the IPE.

Last week, industry sources said the IPE had made a request for Simex to cut short by two years its five-year exclusive contract to list Brent in Asia."The IPE has asked Simex for the termination of the contract as soon as possible," an industry source said.

The sources said Simex would be open to possibly curtailing the contract early, but only if it could achieve a satisfactory settlement. Simex and the IPE havedeclined to comment.

Industry sources said the request from the IPE followed a series of talks that have taken place in the past year between the two exchanges on several topics.

A key issue in the talks was an IPE request for Simex to return half an hour of trading time to the IPE so that the London exchange could open earlier.But at the same time, industry sources said the IPE has appeared to cut back its marketing support for Brent in Asia during the past 18 months, signalling a change in its policy towards the region.

They said a number of senior IPE officials, who had put the SIMEX deal together, have over time left the London exchange.

"All those people who were important in putting this deal together then left," one industry source said.

At the same time, The New York Mercantile Exchange (Nymex) and IPE are planning to develop a global 24-hour joint electronic trading system.This would require the blessing of SIMEX, which has exclusive rights to trade Brent during Asian hours.

So anytermination of the Simex Brent contract would allow the Nymex/IPE plan to progress, the sources said.

If the Brent contract was withdrawn, it would effectively wipe oil futures -- heavily used in Europe and North America for hedging financial risk -- from the Asian open-outcry trading landscape. Nymex lists its crude futures on an electronic system during Asian hours, and Simex has a dormant fuel oil futures contract.

Tom James, head of Asian commodities at Credit Lyonnais Rouse Derivatives, said Brent would lose significant marketing presence in Asia if the Simex contract was terminated early.

"It is not the marketplace of Simex that is a problem, but the structure of the physical market that means there is still greater discussion during Middle East time onwards creating hedge volume in London time," he said."We have seen in Times of big market movements that people are here in Asia to trade Brent on Simex."

Oil industry sources said they were not surprised that Brent could soon be delisted.

Theysaid Brent had struggled since it was launched on Simex in 1995 and traders have long expected its demise.

Many companies in Asia do not hedge physical purchases. Those who do, would hedge in London trading hours when most physical oil trading takes place.In addition, most oil in Asia is purchased on long-term contracts with minimum spot requirements.

Simex has listed several oil futures contracts since 1989, including Dubai crude and gas oil (diesel), apart from the existing Brent and fuel oil contracts.

The fuel oil contract was revised last year to meet the needs of a changing market, but failed to attract sustained market support.

"As time goes on the market will become more ready for futures," one industry source said. "You can make the right decision, but act at the wrong time. Unfortunately, Simex timing was a bit too early and it ran out of steam."

The loss of the Brent contract could also signal the end of energy trading on Simex, the industry sources said.

The exchange has struggled fortrading support for energy contracts throughout this decade. It has developed a new gas oil futures contract with the trade, but so far Simex is not confident about launching it because of a lack of widespread commitment from the market to use it.

"The signals for the futures are not very good," one industry source said.But there are other exchanges willing to take up the challenge. Apart from NYMEX, the Tokyo Commodity Exchange is hoping that the launch earlier this month of a crude oil price index will lead to an underlying futures contract.