Q1 2020 Energy Report

  • 14 Feb 2020
  • By CME Group
  • Topics: Energy

In Our Markets

CME Group Energy 2019 market highlights

CME Group provides access to global Energy benchmark products on NYMEX, the most liquid marketplace with the widest range of Energy futures and options contracts. Our expanding suite of Energy derivatives are available nearly 24 hours a day through our platforms with a suite of pre- and post- trade services.

Highlights include:

 

  • Record levels of extended trading hours volume across Energy products, including WTI Crude futures (CL) with 20.3% of total volume, WTI Crude options (LO) with 16.3%, NY USLD futures (HO) with 8.9%, RBOB Gasoline futures (RB) with 9.4%.
  • Successful execution of three CME electronic auctions of US Crude Oil, allowing physical traders to purchase export cargoes based on NYMEX WTI Houston (HCL) futures.
  • Record NY USLD futures (HO) average daily volume in Q4 2019 of 200K contracts traded.
  • Record Japan/Korea Marker futures (JKM) average daily volume of 125 contracts traded with an average open interest of 6,600 in Q4 2019.

NYMEX Energy benchmarks in 2019


New LNG Freight futures on NYMEX

Our expanding suite of Freight products include three new contracts, allowing LNG participants to effectively hedge LNG freight exposure across three routes: Sabine to Tokyo, Gladstone to Tokyo, and Sabine to UK.

Freight futures’ volumes more than doubled during the last 12 months as market participants look to manage rising costs while new LNG Freight futures traded over 50 lots across all three routes on launch day. The financially-settled LNG Freight futures offer increased flexibility in the LNG marketplace, added counterparty risk mitigation through CME Clearing, and margin offsets to key NYMEX Natural Gas contracts.

Hedge global shipping costs with LNG Freight futures on NYMEX.

Explore LNG Freight futures


WTI Houston Crude Oil quality

Starting with the March 2020 contract, physically delivered WTI Houston Crude Oil will be more reflective of Permian grade crude in the US Gulf Coast market. The enhancements offer the US Gulf Coast crude oil marketplace additional access to adjacent crude markets and a precise hedging tool. 

WTI Houston enhancements:

  • Sulfur is lowering from 0.275% to 0.200% max.
  • Nickel and Vanadium now have aggregate maximum of 3 ppm, down from 4 ppm max each (8 ppm total).
  • Moore Rd is now an available delivery point for buyers.
  • Enterprise service fees are being eliminated for sellers at Genoa Junction and Enterprise Houston Ship Channel (EHSC).
  • Free on board (FOB) delivery at export docks located at Enterprise Houston Ship Channel (EHSC) is being added in Q2 2020.
  • Weekly crude oil quality is being reported at the ECHO delivery hub.

Keep track of weekly crude oil quality statistics at ECHO terminal, based on average sample results of individual WTI and WTL batches.


Navigating IMO 2020 low sulfur regulations

With the implementation of International Maritime Organization (IMO) 2020 low sulfur regulations, global shipping prices are uncertain and causing a rise in liquidity across 0.5% Marine Fuel futures contracts. Our suite of Marine Fuel 0.5% futures, a series of cash-settled futures contracts based on the Platts price assessment, allows traders to hedge marine fuel exposure in three locations: Houston, Singapore, and Rotterdam.

Participants now have more flexibility to hedge IMO 2020 compliant fuel oil across three regions. Since launch, 12 different NYMEX Marine Fuel 0.5% futures have traded at CME Group across the Rotterdam, Singapore, and US Gulf Coast regions. Marine Fuel 0.5% futures average open interest surged to 12,321 in December 2019, more than doubling November’s average open interest of 5,912. 

What's happening in the CME Group Energy options market?

Options growth

The CME Group energy options market is a great indicator of market sentiment, whether bullish or bearish. Movement in options suggests implied volatility in the underlying futures contract.

  • WTI Crude Weekly options (LO1 -LO5) average daily volume has showcased consistent growth over the past few months, setting a new record of 5,382 contracts traded in Dec 2019 and upending the previous record of 5,050 contracts traded in Nov 2018.
  • Natural Gas Calendar Spread options (CSO) set a single-year average daily volume record in 2019 with 6,444 contracts traded, surpassing the previous record set in 2012 of 5,009.
  • A record 52% of all Energy options contracts were traded on-screen via RFQ, surpassing 50% for the first time.

Explore Energy options


Brent Crude Oil options (BZO)

Coming soon: Simpler expiration rules for Brent Crude Oil options are available starting with the March 2020 contract on NYMEX.

Contrary instructions for BZO options will be eliminated, providing additional certainty for traders hedging the volatile crude markets.

Read the SER to learn more


European Natural Gas options (TTF, NBP)

Check out our expanding suite of European Natural Gas options contracts and exercise and assignment prices are now available to trade at CME Group.

  • As the natural gas market heats up, access UK NBP and Dutch TTF Natural Gas options on NYMEX, alongside LNG Japan Korea Marker options to hedge winter volatility.

Discover European Natural Gas options


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