LNG

Intercontinental Exchange (IEC) is preparing to extend trading hours for European gas and power futures to match the 22-hour cycles of US and Asian markets. The move enables seamless LNG cross-basin trade and hedging between TTF, Henry Hub, and JKM benchmarks in aligned hours and US$ pricing.

Intercontinental Exchange (ICE) will launch two new trading points at Trinity Gas Storage’s Bethel facility in East Texas on October 1. Direct transactions in and out of the 24 Bcf gas storage facility will sharpen price transparency in one of the fastest-growing corridors for US LNG exports.

Traded LNG markets are hedged between two risks – winter weather and further shipments from Russia’s sanctioned Arctic LNG 2. Six more vessels are headed to China with estimated arrivals between now and early October, Energy Aspect understands.

Intercontinental Exchange Inc., the owner of the world renowned New York Stock Exchange and platforms for trading global oil and gas futures such as the US Henry Hub, North Sea Brent crude and the Dutch Title Transfer Facility for LNG and natural gas, has signed an accord for dual listing with the Johannesburg Stock Exchange (JSE) in South Africa.

Intercontinental Exchange, the leading global provider of trading platforms and clearing, and US pricing agency Platts have launched simultaneous consultations with the market on the evolution of the Brent complex, which includes Dated Brent, Cash Brent and ICE Brent Crude Oil futures.

ICE, which also operates other exchanges, including the New York Stock Exchange, also offers its platforms to allow traders to manage risk across multiple asset classes, including LNG.

In the ICE overall energy complex, it has posted record activity during 2021 in two key LNG trading derivatives, the European benchmark Dutch Title Transfer Facility (TTF) and the Japan-Korea Marker for North Asian spot cargoes.

The paper on the Brent market, co-authored by Platts and ICE which oversee, respectively, the Dated Brent physical benchmark price assessment and the ICE Brent Crude Oil futures contract, provides an overview of options for adding additional deliverable crude oil to the Brent complex and outlines a number of key issues and questions as it seeks market feedback.

Ongoing discussions conducted separately by ICE and Platts have demonstrated that industry opinion has focused specifically on two possible streams of crude to become part of Dated Brent.

The first is Johan Sverdrup as a deliverable option under the Forward Brent contract, which would remain on a Free on Board (FOB) basis.

The second is West Texas Intermediate (WTI) Midland oil, which would be a deliverable grade on a FOB US Gulf Coast basis.

All interested parties are encouraged to provide feedback and to put forward any further relevant items through the respective consultation channels.

The deadline for comments is September 30, 2021.

“Key to Brent’s multi-decade success as the global crude oil benchmark, has been its ability to evolve, and we look forward to ongoing discussions with customers as we navigate this next phase of its evolution with Platts,” said Jeff Barbuto, Global Head of Oil Markets at ICE.

“Our goal for this consultation is to facilitate a discussion with market participants covering all of the key issues which need to be addressed so that we can strengthen the Brent complex for decades to come,” added Barbuto.

In addition to Brent, natural gas has become a global market and the record levels of open interest and strong trading activity in TTF and JKM LNG futures reflect how these contracts have been developed by ICE and are at the forefront of global natural gas price formation.

Some long-term LNG supply contracts for nations like Japan are also linked to the oil price.

TTF and JKM futures and options form part of ICE’s global natural gas complex alongside the UK National Balancing Point, Henry Hub, the West India Marker (WIM) LNG (Platts) and the Spark LNG Freight Futures contracts. 

The Intercontinental Exchange, the US-based operator of trading in commodity and financial markets, said ICE’s North American gas complex and natural gas futures hit an open-interest record of 18.5 million contracts during this current second quarter of 2020 as trading in European and Asian LNG derivatives also jumped.

“In ICE’s North American gas complex, dynamic US shale production has stimulated activity,” said the Atlanta, Georgia-based company.

“With futures open interest at record levels, up 30 percent year-over-year, market share has increased as commercial traders return to Henry Hub-related hedging in response to increased volatility in the North American market,” ICE explained.

These derivatives are purchased and sold by parties such as traders, oil and gas companies and utilities as hedges against rises and falls in physical resource prices.

At the same time as new highs are recorded in North America, ICE said the globalization of natural gas is propelling the growth of the ICE Dutch Title Transfer Facility (TTF) indicators for LNG shipped to Europe and the Japan-Korea Marker (Platts) for Asian spot LNG cargo futures.

ICE owns 12 regulated exchanges and platforms and its best-known subsidiary is the New York Stock Exchange.

The platform operator stated that the Continental European TTF and the Asian JKM are now “benchmarks relied on by commercial participants” around the world.

“As uncertainty has been rising in both supply and demand dynamics across the world, these traders are increasingly utilizing the breadth and depth of liquidity in ICE’s natural gas and oil benchmarks to help manage risk and optimize their natural gas portfolios,” ICE stated.

As a result, ICE said that open interest in TTF futures and options has increased by more than 70 percent year-over-year, while JKM futures and options open interest has more than doubled year-on-year.

In May 2020, the JKM hit record open interest of more than 100,000 contracts.

“The momentum behind the ICE TTF contract is driven by Europe’s unique role as the global balancing market for LNG which is cementing its utility as a risk management tool for customers to hedge their natural gas price risk,” ICE explained.

“This is leading TTF to become increasingly internationalized, while at the same time, the record growth in the use of JKM futures reflects its increasing prominence as Asia’s natural gas benchmark,” added the markets operator.

“We are witnessing TTF evolve into the global benchmark for natural gas, similar to the critical role Brent plays in pricing global oil markets,” said Ben Jackson, President of ICE.

“The momentum behind ICE’s gas benchmarks is attracting more and more participants who are using these benchmarks to manage their exposure to risk at this volatile time,” added Jackson.

ICE’s global natural gas complex spans trading hubs from the US and Canada to Europe and Asia, underpinned by an offering of more than 600 financially and physically-delivered contracts.

“Open interest in ICE’s US Basis contracts, which are used to manage exposure to natural gas at different delivery points throughout North America, set a series of records during April and May, and hit a new high of more than 10.1 million contracts on May 1, 2020,” said the company.

“ICE offers 60 different basis locations to trade, enabling customers to mitigate their risk at locations across North America,” it added.

Intercontinental Exchange, the leading operator of global exchanges and clearing houses and energy and natural gas pricing and derivatives, said the Dutch Title Transfer Facility, the main Continental European natural gas benchmark, and the Asian Japan-Korea Marker price for LNG had achieved new trading volume highs.

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.

The Singapore Exchange (SGX) and Energy Market Company (EMC) are to discontinue the publication of the prices and indices for spot LNG cargoes for Southeast Asia, North Asia and Dubai, Kuwait and India.

May 1 (LNGJ) - Intercontinental Exchange Inc., the US-based leading operator of global exchanges, clearing houses and pricing data for commodities and energy resources such as natural gas, said that ICE Benchmark Administration Limited (IBA) has been authorised as a regulated benchmark administrator under the European Union Benchmarks Regulation (BMR). Authorisation had been previously granted by the UK Financial Conduct Authority. “We are pleased that IBA has received EU regulated benchmark administrator status” said Tim Bowler, President of IBA. “IBA was founded to reform and bring transparency to global benchmarks. We aim to adopt the highest standards for the benchmarks that we administer,” added Bowler. IBA is one of the world’s most experienced administrators for regulated benchmarks. A subsidiary of Intercontinental Exchange, IBA was founded in 2014 and administers an array of important benchmarks, including bank interest rates.