LNG

Clarksons, the UK provider of integrated maritime services including broking, finance and research has brokered the world’s first 174,000 cubic metres capacity LNG Forward Freight Agreement (FFA) trade with the Chicago Mercantile Exchange (CME) Group.

Intercontinental Exchange, the leading global provider of trading platforms and clearing, has posted record activity in two key LNG trading derivatives, US Henry Hub natural gas and the Dutch Title Transfer Facility (TTF), the European benchmark.

ICE also announced record total futures open interest of more than 48.1 million contracts on August 25.

The platform’s North American natural gas futures and options, which includes the Henry Hub and US Basis Markets contracts, hit record open interest of 23 million, up 10 percent year-over-year, with open interest in Henry Hub futures and options up 28 percent year-on-year.

The natural gas futures and options reached record open interest of almost 3.3 million contracts.

The Dutch TTF is increasing in importance as energy traders and asset owners manage their global gas price risk.

The Dutch TFF, reflecting LNG cargo values in Europe, was last at $16.50 per million British thermal units and tight natural gas markets in the European Union and in the UK.

The UK National Balancing Point benchmark natural gas prices was even higher than the Dutch TTF at $16.85 per MMBtu on August 30.

“TTF holds open interest out to December 2028. In June, ICE extended the TTF curve to December 2031 following demand from commercial hedgers to further align TTF with typical lengths of medium to long term deals between LNG buyers and sellers, and to help market participants manage long term risk,” explained ICE.

“The globalization of natural gas, which is contributing to the growth of TTF, has also led to the establishment of the Asian natural gas benchmark ICE JKM LNG (Platts) where open interest is up 26 percent year-on-year,” said ICE.

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

.Open interest across ICE’s global environmental complex was also up 21 percent across futures and options, as participants use these markets to also price climate risk.

“As the market manages changes in interest rates, open interest in Interest Rate futures and options is up 26 percent year-on-year,” ICE added. 

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, the leading US operator of global exchange platforms and clearing houses, said the LNG freight futures contracts based on Spark Commodities price assessments had a successful launch with 30 lots traded on the first day.

CME Group Inc., the global derivatives company for energy and other commodities to hedge physical LNG, natural gas, oil or gasoline trading reported a surge in first-half income but failed to repeat the record numbers for March and April 2020.

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. 

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.