LNG

U.S. LNG feedgas demand is weakening with Freeport LNG pulling nominations down to about 1 bcf/d as major maintenance began on July 10, while Golden Pass has also been showing erratic feedgas behaviour during ramp-up.

The London-based Baltic Exchange is starting its first full week of issuing independent indices for liquified natural gas propulsion fuel, based on vessels burning LNG rather than marine fuel oil or marine gas oil as their primary fuel.

CME Group, the world's leading derivatives marketplace, has launched four new Japanese electricity futures contracts and two new LNG futures contracts will be available for trading on February 8, 2021, pending regulatory review.

March 12 (LNGJ) - CME Group, one of the largest derivatives trading and settlement platforms for energy futures and options, including natural gas and LNG, said it would close its Chicago trading floor as of the close of business on Friday, March 13, 2020, as a precaution to reduce large gatherings that can contribute to the spread of coronavirus. CME said the move was in line with the advice of medical professionals. 

   “All products will continue to trade on CME Globex as they do today,” stated CME. “No coronavirus cases have been reported on the trading floor or in the Chicago Board of Trade building,” it added. CME explained that the reopening of the trading floor would be evaluated as more medical guidance on the coronavirus becomes available. The company's headquarters at 20 S Wacker Drive in Chicago would remain open. 

CME Group, the world's leading derivatives market, reported an all-time daily volume record for oil and natural gas futures and options after markets plunged under the weight of the economic effects of the coronavirus and an oil price war, with trading levels in energy futures high in Asia after the US close.

CME said the record of 6.8 million contracts was set on March 9 and surpassed the previous record of 6.2M recorded on September 16, 2019 after the attacks from Yemen on Saudi oil installations.

The futures and options surge came the day after North Sea Brent crude dropped by its biggest margin in 30 years in such a short time span from almost $50 per barrel to $33.56 as Organization of Petroleum Exporting Countries (OPEC) and Russia failed to agree production cuts.

However, oil and gas and stock markets staged solid rebounds on March 10 and March 11 after the previous day’s tumble on signs of co-ordinated action by the world’s biggest economies to counter the economic impacts of the coronavirus epidemic.

The biggest CME traded volumes on March 9 were in Crude Oil futures, Henry Hub Natural Gas futures, New York Harbor Ultra Low Sulfur Diesel (ULSD), RBOB Gasoline Futures and Brent Last Day Financial Futures.

Eighth on the CME traded list was the Natural Gas European Option.

The CME’s LNG futures are all relatively new and did not make the list as they were only launched within the past six months.

The CME, which is the former Chicago Mercantile Exchange, introduced its LNG freight futures on December 23, 2019.

The trading and settlement platform had previously launched a futures contract in October 2019 for LNG linked to physically delivered volumes from Cheniere’s Sabine Pass plant.

CME noted that its West Texas Intermediate Light Sweet Crude Oil futures and options also reached a record 4.8M contracts on March 9, surpassing the previous record of 4.3M contracts traded on September 16, 2019.

“Amid global economic uncertainty, market participants around the world continue to turn to CME Group's energy futures and options for managing their risk,” said Peter Keavey, CME Group Global Head of Energy.

“In particular, our benchmark energy products have experienced high volumes outside of US market hours, demonstrating deep liquidity and flexibility around the clock,” added Keavey.

LNG prices under long-term supply contracts are expected to be lower during the next earnings reporting season by the oil and gas majors as Asian natural gas utilities benefit from lower prices.

In US natural gas, the New York Mercantile Exchange front-month future rose again to $1.93 per million British thermal units and the Henry Hub day-ahead price was higher at $1.85 per MMBtu.

The Platts Japan-Korea Marker price for Asian spot LNG was last at $3.115 per MMBtu for April cargoes.

The main European LNG price indicators rose by around 15 US cents per MMBtu.

The UK National Balancing Point price that guides LNG prices for the Atlantic Basin was last at $3.00 per MMBtu, up from $2.85 per MMBtu and the main natural gas price on Continental Europe, the Dutch Title Transfer Facility (TTF), was also at $3.00 per MMBtu.

The US Gulf Coast LNG prices from the Intercontinental Exchange, dropped during the past week become of the market glut.

The front-month April 2020 price rallied to $2.401 per MMBtu from $2.390 per MMBtu.

The May LNG future was at $2.451 per MMBtu, up from a previous $2.449 per MMBtu.

The US GC LNG future traded on ICE is a settled derivatives contract available through to April 2022 and based on the average free-on-board (FOB) Gulf Coast LNG price. 

The Baltic Exchange freight derivatives markets for both tankers and dry cargo vessels saw increased traded volumes last year when the exchange also launched the first Forward Freight Agreement (FFA) trades in the LNG market. 

Settled against the Baltic’s recently launched suite of assessments for gas shipping, the first LNG swap took place in July 2019, with cleared trades following at the end of 2019 and open-interest building.

The Exchange said in its annual review that freight derivatives markets for both tankers and dry cargo vessels saw increased traded volumes in 2019.

In LNG, the London-based Exchange collects data from shipping brokers to provide assessment of three routes on the CME Group trading platform.

These are from Australia’s Gladstone port in Queensland to Tokyo, from the US Sabine Pass LNG plant in Louisiana, owned by Cheniere Energy, to the UK. A third freight contract is from Sabine Pass to Tokyo.

In the overall freight derivatives markets Tanker Forward Freight Agreement (FFA) volumes were up 38 percent in 2019 compared the previous year, reaching 473,113 lots. 

Dry FFA volumes hit 1,632,773 lots, up 11 percent on 2018. 

One lot is defined as a day’s hire of a vessel or 1000 metric tonnes of ocean transportation of cargo.

“It was another solid year in 2019 for the freight derivatives market,” said, Baltic Exchange Chief Executive Mark Jackson.

“Underpinning these volumes are both volatility in the freight markets and trust in the Baltic Exchange’s settlement data,” he said.

“Last year both the dry bulk and tanker markets experienced big swings, with issues ranging from the Vale iron ore disaster, attacks on tanker shipping in the Middle East and IMO2020 impacting sentiment,” added Jackson.

The Exchange has also just launched in February 2020 daily spot ocean freight rate indices for 40-foot containers (FEUs).

The rate is now available via the Exchange and the Freightos Group, adding real-time, transparent price discovery and risk mitigation into the container freight market that powers global trade. 

The Freightos Baltic Index (FBX) has been produced weekly since April 2018 by digital freight platform Freightos, based off of live pricing data from hundreds of global logistics providers.

“With the robust, real-time data, as well as oversight from the Baltic Exchange, the FBX is positioned better than ever to provide a true pulse of the market in one of the world’s largest and most important industries,” said Freightos CEO Zvi Schreiber.

“Container shipping pricing has become volatile and FBX will be the foundation of index-linking and future derivatives which allow carriers, forwarders and imports-exporters to hedge their risk, as is already customary in other industries,” added Schreiber.

The Exchange, which already manages a diverse range of benchmarks for the global shipping markets, is also in the process of applying for Benchmark Administrator status with the UK’s Financial Conduct Authority (FCA).   

Clarksons, the London-based ship brokers and shipping and financial services company, said it had completed the world’s first LNG freight futures trade at year-end involving two of the leading global commodities traders.

CME Group, the world's leading derivatives marketplace, reported its December and full-year 2019 market statistics, showing it reached average daily volumes in energy of 2.1 million contracts per day for products such as crude oil, natural gas and LNG, and now including a new LNG freight future.

CME Group, the global exchange and energy and commodities derivates trading and clearance platform operator, said it planned to offer the first futures contracts for liquefied natural gas freight.

Global commodities exchange operator CME Group said it would launch a futures contract for liquefied natural gas linked to physically delivered volumes from the Sabine Pass export plant of Cheniere Energy.