LNG

Asian LNG spot prices narrowed the differential with European Union wholesale gas markets as futures trading signalled high prices in the third quarter and beyond as the gas complex remained underpinned by high Brent crude values even as an oil demand turnaround is awaited.

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.