Natural Gas & LNG

Natural gas prices in the United States have plummeted since the beginning of November as persistent mild weather has meant that inventories remain high instead of shrinking in line with seasonal trends.

Futures prices for gas delivered to Henry Hub in January 2021 fell to just over $ 2.40 per million British thermal units, down from nearly $ 3.50 at the end of October. And the six-month calendar spread between futures contracts with January and July deliveries plummeted to a contango (forward prices above spot prices) of nearly 13 cents, from a backwardation (spot above forwards) of more than 40 cents.

Lower futures prices will encourage maximum gas combustion by
US power producers, mainly at the expense of coal, while contango will pay for higher inventories to carry over until next summer.

Price agency S&P Global Platts (SPGI.N) said its West Indian market price valuation was used as the settlement price for the first reported liquefied natural gas (LNG) futures contract sold in Indian market.

 The financially regulated derivative contract was traded between commodity trader Glencore and France’s Total in an exchange organized by brokerage firm Tullett Prebon, Platts said in a media statement.

The West Indian Marker Price Valuation, launched in 2010, is used by Platts to evaluate spot cargoes delivered to ports in India and the Middle East although it is not widely used as a benchmark.

Asian LNG buyers usually hedge their LNG cargoes using Brent crude oil futures or gas futures traded in the US and Europe.

The deal Tullet negotiated was denominated in dollars and was executed as a spread over the futures contract…

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