Henry Hub Natural Gas Futures (Physical) are an outright natural gas contract between a buyer and a seller that offers opportunities for risk management of the highly volatile pricing of natural gas. The contract:
- Is widely used as a national benchmark price for natural gas, which accounts for almost a quarter of United States energy
- Reflects a vigorous basis market based on the pricing relationships between Henry Hub and other important natural gas market centers in the continental United States and Canada
- Is the second-highest volume futures contract in the world based on a physical commodity
Things to know:
- The price is based on delivery at the Henry Hub in Louisiana, the nexus of 16 intra- and interstate natural gas pipeline systems that draw supplies from the region's prolific gas deposits. The pipelines serve markets throughout the U.S. East Coast, the Gulf Coast, the Midwest, and up to the Canadian border.
- Traded via open outcry, electronically on CME Globex, and off-exchange for clearing only as an EFS, EFP or block trade through CME ClearPort
- Trading at settlement is available for the front three months, subject to the existing TAS rules of the underlying respective physical products
- Option types: American, calendar spread, European, daily