LNG

Intercontinental Exchange Inc., the US-based operator of regulated trading platforms for commodity and financial markets, has reported that daily volumes trading in energy futures and options rose by more than 80 percent to record levels in March.

The Atlanta, Georgia-based company with divisions for trading, clearing and data has provided March and first-quarter 2020 trading
volumes, related revenue statistics and also provided an updated operating expense outlook.

ICE recorded multiple records across the crude oil, natural gas and fuel product futures markets.

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

Platform operator ICE said that its record futures and options overall average daily volumes (ADV) for energy and other commodities amounted to 9.4 million lots for March 2020, up 56 percent year-on-year.

ICE said record open interest (OI) volumes came to 84.4M lots, up 7 percent from March 2019.

For the energy sector record March daily volumes in futures and options amounted to 4.4M lots, up 82 percent on the previous year.

The record energy OI lots reached 45.9M on March 25, 2020, up 24 percent on March 2019.

LNG products traded on ICE platforms include the growing US Gulf Coast LNG last day future available since October 2019.

The future trades out to May 2022 when it was last quoated at $3.655 per million British thermal units.

However, the front-month May 2020 GC LNG future illustrates the price plunge in the over-supplied LNG market with a current price of $1.350 per MMBtu.

Among the various record level futures and options products traded in March, ICE said the ADV for oil were up 85 percent and the OI of 15.3M lots was reached on March 25, 2020.

The Brent North Sea crude ADV were 87 percent higher year-on-year and record OI reached 6.1M lots on March 25, up 27 percent from 2019.

West Texas Intermediate crude ADV rose 82 percent year-on-year and the futures OI level of 698,000 lots was reached on March 26 with total March OI up 7 percent reached versus March 2019.

The North American natural gas ADV were 88 percent higher compared with last year and futures OI of 15.7M lots was reached on March 26. The Total March OI for natural gas was up 26 percent.

The European natural gas ADV were up 50 percent from 2019 and the record OI of 3.5M lots was on March 26, 49 percent higher than the year before.

There was also a record emissions ADV with a rise for March of 96 percent and OI volumes were up 15 percent.

ICE said operating expenses are expected to be in the range of $663 million to $673M for the first quarter $2.60 billion to $2.65Bln for the full year respectively.

“Revised adjusted expense guidance for the first quarter of includes approximately $4 million related to the February 2020 acquisition of Bridge2 Solutions,” said ICE in reference to its purchase of the digital provider of loyalty solutions for merchants and consumers.

“In this volatile period, we are grateful to our customers who rely on our dependable, stable and resilient systems amid record activity across every asset class,” said Ben Jackson, President of ICE.

“We’re working around the clock to help ensure the orderly functioning of our markets, providing our customers with the critical risk management tools that these markets provide,” he added.

CME Group, the other leading derivatives market, has also reported record daily volumes for oil and natural gas futures and options after the market falls.

The biggest CME traded volumes have been on West Texas Intermediate Light Sweet 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.

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

The trading and settlement platform launched the Platts LNG future for LNG in 2019 linked to physically delivered volumes from Cheniere’s Sabine Pass plant in Louisiana.

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.