LNG

Intercontinental Exchange, a leading global provider of energy trading platforms for futures and options and which is in the process of launching new LNG futures for Europe, reported strong third-quarter earnings.

Intercontinental Exchange, the leading operator of global energy derivative exchanges and clearing houses, reported an increase in first-quarter revenues as it continued to launch new products to meet customer demand, including most recently LNG freight futures and a range of Abu Dhabi oil futures and options.

ICE said in the quarter ended March 31, 2021, consolidated net revenues were $1.8 billion, up 15 percent year-over-year including exchange net revenues of $974M, fixed income and data services revenues of $468M and mortgage technology revenues of $355M.

Revenue from energy trading products dropped by 12 percent overall in the quarter after the winter peak to $310M from $353M in the same three months of $2020.

Exchanges operating income for the first quarter came to $653M and operating margin was 67 percent.

ICE, based in Atlanta, Georgia, launched its LNG freight futures contracts on March 23 based on price assessments from Spark Commodities with 30 lots traded on the first day.

First day trading included 15 lots of Spark30S Atlantic and 15 lots of Spark25S Pacific LNG freight futures contracts for the June 2021 contract expiry.

These first trades involved some of the LNG industry’s leading market participants including Total, Gunvor, Vitol, and Glencore, and were brokered by Clarksons, showing strong support for the new contracts.

ICE introduced the new LNG freight futures based on price assessments from Spark Commodities, a provider of technology-based solutions for promoting market liquidity.

Singapore-based Spark is backed by French data firm Kpler and EEX, part of the Deutsche Börse Group.

LNG and gas products

The ICE freight contracts form part of ICE's global natural gas complex alongside existing benchmark natural gas and LNG derivatives such as the Dutch TTF, the UK National Balancing Point, US Henry Hub, JKM LNG (Platts) and the West India Marker (WIM LNG) contracts.

“We are pleased to report strong first-quarter results that extend our track-record of growth. As we emerge from the Covid-19 pandemic, never have our digital networks proven more needed and resilient,” said Jeffrey C. Sprecher, ICE Chairman and Chief Executive.

“We are grateful to our customers that continue to rely on our technology, data and market infrastructure, and we remain focused on innovating across asset classes to drive greater efficiency and transparency,” declared Sprecher.

Adjusted net income attributable to ICE increased by 9 percent to $758M compared with $695M in the 2020 first quarter.

Free cash flow amounted to $702M versus $434M in the prior-year period.

At the end of the quarter on March 31, ICE launched its oil futures contract for LNG exporter Abu Dhabi and a total of 8,854 cleared lots were traded on the first day.

The start of trading of the ICE Murban Crude Oil Futures (IFAN) had been delayed from 2020 by the market oil market slump and Covid-19.

ICE Murban Crude Oil Futures opened for trading alongside 18 Murban-related cash settled derivatives and inter-commodity spreads, offering the market the broadest range of ways to trade and hedge Murban crude.

Market activity on ICE Futures Abu Dhabi on the first day of trading included 6,344 ICE Murban Crude Oil futures contracts and 2,510 Murban related cash settled derivative contracts.

A total of 27 firms traded on day one of the launch.

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.