LNG

Liquefied natural gas and wholesale pipeline gas prices and futures eased this week to be just above recent seasonal levels pre-2022 for the North Asian spot cargo market and European gas benchmarks as shipping spot charter rates surged and European Union gas storage levels continued their record build.

Intercontinental Exchange, the leading global provider of trading platforms and clearing, has posted record open interest in its futures and options markets of 46.7 million contracts and the surge was led by US natural gas and LNG hedging instruments.

The ICE said the open interest record occurred on April 25 and with the number of contracts rising by 11 percent.

“As participants manage uncertainty in US natural gas markets, open interest across ICE's North American natural gas futures and options, which includes Henry Hub and natural gas basis markets, is up 26 percent since the start of the year at roughly 26 million contracts,” said an ICE statement.

“Open interest in Henry Hub futures and options is up 34 percent over the period, while open interest in North American natural gas futures hit a record 16.85M contracts on April 26,” added ICE.

Trabue Bland, President of ICE Futures US, said customers are using the deeply liquid energy markets to manage their exposure and price commodities on which millions of people rely upon.

“Our customers are navigating commodity and inflation risks on a scale that many have never experienced and are using all the tools at their disposal through futures and options to do this,” stated Bland.

Uncertainty

Reflecting how the market typically reacts to high levels of uncertainty, ICE’s energy options markets have seen particular growth since the start of 2022, with open interest in total energy options up 35 percent.

Open interest is the number of contracts that remain open each day and reflects how customers are adding to their positions for a period of time.

Open interest in longer-dated positions tends to be held by commercial customers hedging their exposure to price risk.

The ICE also runs the market in futures and options trading in the Dutch Title Transfer Facility (TTF), the European natural gas benchmark.

The Dutch TTF, US Henry Hub, Japan-Korea Marker LNG spot cargo price and UK NBP futures and options form most of the ICE’s global natural gas complex, alongside the West India Marker (WIM) LNG (Platts) and the Spark LNG Freight Futures contracts.

Open Interest trading on the TTF was also risen. The Dutch TTF and the UK NBP have hit record levels in the past year.

The Dutch TTF and the UK NBP have previously hit the equivalent of $40 per MMBtu and the futures have maintained elevated levels ever since through 2022.

Wholesale natural gas prices and futures in Europe and LNG values were locked in a steep trajectory as they soared by more than 76 percent on the week of Russia’s invasion of Ukraine amid worsening global energy and commodities supply concerns and with North Sea Brent staying over $100 a barrel to increase oil-linked long-term LNG values.

North Sea Brent crude oil prices rose to their highest level in seven-and-a-half years as European natural gas and LNG cargo prices gained 20 percent after Russia said it was taking military action in neighbouring majority ethnic-Russian areas of Ukraine.

Prices spiked for North Asian spot cargoes in the post-winter windows to $28 per million British thermal units, underpinned by increasing contract cargo prices linked to oil and with European benchmarks staying at seasonal record levels and fuelling global concerns over gas shortages.

The US front-month New York Mercantile Exchange natural gas price soared to seasonal record heights before expiration as the nation saw the cancellation of one of the key infrastructure projects, the PennEast Pipeline, linked to future demand in the US Northeast for natural gas from the Marcellus Shale Basin.

June 29 (LNGJ) - US spot natural gas prices and futures soared and the New York Mercantile Exchange (NYMEX) front-month contract expired above $3.60 per million British thermal units. The Henry Hub spot price also jumped to $3.59 per MMBtu as a US heatwave led to record temperatures in the Pacific Northwest and spurred demand for cooling. The US benchmark prices affect LNG contracts linked to the Henry Hub. The rising US temperatures led to pipeline issues in some areas.

   Spot natural gas prices also continued to strengthen in other regions, reaching $7.00 per MMBtu in California. US weather forecasters expect the heatwave to reach the East Coast by July 6 and to last until at least July 12, resulting in high temperatures in most US regions and firm domestic gas-fired power demand.

Demand for liquefied natural gas was high worldwide as liftings remain in the three-digit zone with spot cargo prices rising for North Asia and with European benchmark gas values offering Atlantic-Pacific competition.

Global liquefied natural gas plants dispatched a steady flow of cargoes as North Asia spot prices slipped on the week, though were offset by expectations of long-term LNG contract prices increasing after the North Sea Brent crude oil price hit its highest level in a year.

Cargo liftings of liquefied natural gas increased worldwide for a fifth week, and likely the highest of 2020, as North Asia spot LNG prices jumped to $9.200 per million British thermal units for February 2021 and North Sea Brent crude oil prices hit the $50 a barrel mark for the first time in 10 months.