LNG

Intercontinental Exchange, the leading global provider of trading platforms for the whole energy complex from crude oil to LNG cargoes and European and Asian natural gas futures and options, has refined its contract for key US Gulf Coast oil futures.

Intercontinental Exchange Inc., the leading global provider of energy trading platforms, said that global futures and options markets reached record open interest of almost 94 million contracts during March as market players in sectors such as oil, natural gas and LNG launched hedging operations as prices declined.

Intercontinental Exchange, the leading global provider of energy trading platforms for futures and options, plans to launch a Dutch Title Transfer Facility Calendar Spread Option (CSO) contract on December 11 subject to regulatory approval.

Intercontinental Exchange, the leading global provider of energy trading platforms for futures and options, reported a record number of Dutch Title Transfer Facility (TFF) gas futures and options traded during May 2023 as the market tries to manage natural gas price risk exposure.

A record 5.7 million TTF futures and options were traded last month, which is the equivalent to a record 4,158 terawatt hours.

“Liquidity in ICE’s benchmark TTF market has grown strongly in 2023 with open interest up 37 percent year-over-year at 2.6 million contracts, the highest level since January 2022,” said Atlanta, Georgia-based ICE.

“In addition, ICE is seeing record market participation in its TTF futures and options markets, with hedging out to December 2031,” ICE said.

Analysts explained that the TTF global benchmark for natural gas and the futures market sends price signals which market participants rely on to manage their global natural gas price exposure as well as pricing the flow of natural gas in Europe.

Critical signals

“The success of the TTF derivatives market in sending these critical price signals has helped Europe balance supply and demand for natural gas, as well as identifying and clearing infrastructure bottlenecks that were created due to the changing flows of natural gas caused by the material reduction of gas flowing from Russia,” stated Gordon Bennett, Managing Director of Utility Markets at ICE.

According to ICE data, about 25 million TTF contracts have traded on ICE this year, up 17 percent year on year.

The firm noted that there was “particularly strong” activity in TTF Options where volume is up 179 percent and open interest has risen by up to 68 percent compared with 2022.

“Over one million TTF options were traded in the month of May, the second-highest volume month since TTF Options were launched on ICE Endex in 2013,” ICE said.

Open interest across ICE’s global natural gas portfolio is 31 million contracts on increase of 10 percent over last year.

The US firm offers a range of LNG market risk coverage including the US Henry Hub, the Platts Japan-Korea Marker LNG spot cargo price and UK National Balancing Point futures as well as the Platts West India Marker (WIM) and the Spark LNG Freight contracts.

Intercontinental Exchange, the leading global provider of market platforms for energy futures and options and other assets, intends to implement the European Union’s Market Correction Mechanism Regulation (MCM Regulation) and related price cap on Dutch Title Transfer Facility (TTF) natural gas derivatives, in time for entry into force of the regulation, though it is also planning a London-based TTF trading alternative.

Intercontinental Exchange, the leading operator of global exchanges and clearing houses and futures such as the US Gulf Coast LNG derivative, reported September and third-quarter 2020 trading volumes with records set in energy products, including the continental European natural gas benchmark, the Dutch Title Transfer Facility.

A record number of Open Interest European Gas futures were traded with 2.3 million lots reached on September 29, 2020, including a record Dutch TTF futures Open Interest of 1.7M lots.

Open Interest is the total number of outstanding derivative contracts, such as options or futures that have not been settled for an asset.

The Dutch TTF, which has replaced the UK National Balancing Point price as the European Union benchmark, saw a 55 percent surge in lots year-on-year.

Average daily volumes in the third quarter for the Dutch TTF were up 17 percent.

Analysts said 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 usefulness as a risk management tool for customers to hedge their natural gas price risk.

“For two decades now, our core focus at ICE has been giving actionable information to our customers, connecting them to highly liquid digital markets, delivering efficiencies and a reliable, resilient settlement process,” said Ben Jackson, President of Atlanta, Georgia-based company ICE.

ICE owns 12 regulated exchanges and platforms. Its 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.

“As our customers continue navigating a challenging year, we’re working closely with them to ensure they have the tools they need to access prices, execute trading strategies and efficiently manage their risk,” added Jackson.

ICE said September and third-quarter highlights centred on the Open Interest energy sector with a 10 percent surge in transactions year-on-year.

Other quarterly highlights included the North American natural gas Open Interest, up 18 percent compared with the same three months of 2019.

The US benchmark Henry Hub Open Interest was up 36 percent year-on-year and average daily volumes increased 21 percent for the quarter.

In petroleum products, the average daily volumes for RBOB gasoline were up 261 percent in the quarter and heating oil increased 51 percent in Open Interest and average daily volumes jumped 184 percent.

The Emissions-Environmentals Open Interest market was more muted with Open Interest up 6 percent and average daily volumes rising by 7 percent.

Intercontinental Exchange Inc. a leading operator of global exchanges and clearing houses, and US energy pricing company S&P Global Platts said they were launching an electronic platform known as eWindow for the liquefied natural gas market.

Unlike oil, which has several financial and physical trading platforms and exchanges, LNG markets are still evolving with various companies offering different productions

Platts, a unit of the US credit rating agency S&P Global Inc, already uses the eWindow platform as part of its pricing process.

The platform allows participating companies to key in their bids, offers or transactions directly and which appear on a screen for others to see.

It is aiming to launch the new platform with ICE in a few months.

ICE and Platts said the eWindow platform will be an online data-entry and communications tool that allows market participants in the Platts Markets On Close (MOC) price assessment process to communicate bids, offers and transactions directly to Platts editors and the marketplace simultaneously.

“Its grid-like screen offers an easy, at-a-glance view and allows market participants to instantly respond to the bids and offers submitted,” said a statement.

“The eWindow method is already widely adopted to power the MOC process for key oil benchmarks and now will be accessible for Platts LNG price assessments, such as Platts Japan Korea Marker, the benchmark price for LNG delivered into Northeast Asia,” they added.

ICE already has the broadest range of natural gas benchmarks, hosting UK National Balancing Point, Dutch Title Transfer Facility, Henry Hub and the Japan Korea Marker prices, allowing market participants to hedge their price risk via futures and options for the major gas hubs globally.

ICE-JKM LNG (Platts) futures and options contracts are increasingly being used as the benchmark contract for LNG in Asia and continue to break new trading records as one of the fastest growing natural gas benchmarks and the most liquid Asian natural gas benchmark.

ICE-JKM LNG hit a record 44,394 lots for futures and options combined in June and reached a new open interest record of 52,080 lots, at the end of June.

“As LNG markets continue to liberalize and new types of price agreements emerge between buyers and sellers of LNG, a range of hedging products are critical to allow the market to hedge risk and manage price exposure,” said the companies.

Chuck Vice, deputy chairman of ICE said Platts and ICE have had a long and successful history of working together to bring transparent price discovery to energy markets.

“The launch of eWindow is an important milestone in the ongoing maturity and evolution of LNG markets, moving it to the next level in terms of standardization and transparency,” he said.

“ICE is home to the broadest range of natural gas benchmark futures markets with an established and growing global community of gas traders using futures and options to transact and manage their price risk,” he stated.

Trading does not occur on the eWindow, but the tool's compatibility with ICE technology allows eWindow users to execute trades on the ICE platform without leaving the Platts MOC price assessment process and environment.