Q1 2021 Energy Report

  • 3 Feb 2021
  • By CME Group
  • Topics: Energy

MARKET INSIGHTS

2020 ended with a continued trend in increasing volumes in European and Asian trading hours for energy benchmark products with overall volumes increasing.

  • Henry Hub futures (NG) achieved record ADV of 477K in 2020, which is up 16% YoY.
  • Henry Hub options (LN) in 2020 had the second highest volumes recorded, driven by record volume in calendar spread options.
  • WTI futures (CL) in 2020 had a record 24% ADV executed during non-US hours.
  • WTI options (LO) in 2020 had a record 20% ADV executed during non-US hours.
  • RBOB Gasoline futures (RB) average daily open interest increased 11% from the end of Q3 to end of Q4.
  • NY Harbor ULSD futures (HO) ADV increased 13% from the end of Q3 to the end of Q4.

The global rise of Henry Hub futures

The US natural gas market has become one of the most competitive, efficient, transparent, and liquid natural gas markets in the world due to its ample supply and robust infrastructure. Henry Hub futures have seen a strong upward trend in trading during European and Asian trading hours over the last year, further solidifying Henry Hub's prominence as a global benchmark.

  • How have US LNG exports influenced expanding the global trade in Henry Hub futures?
  • Why is Henry Hub relied upon as a price reference to inter-regional arbitrage opportunities?
  • What are the implications of the growth of Henry Hub trading activity during non-US hours?

Source: CME Group


A deeper look into Henry Hub options

A combination of economic factors around the pandemic and uncertainty around the severity of winter in the Northern Hemisphere has continued to contribute to increases in both Henry Hub futures and options.  

In December, 64% of on-screen volume for LN was executed via RFQ. 

Source: CME Group


Propane futures volumes thrive on global price volatility

Propane trade flows are changing significantly, largely due to higher production across the United States. 

  • What has contributed to the sharp growth in Mont Belvieu trading volumes? 
  • How are European and Asian volumes changing as US propane exports grow internationally?
  • What are some of the challenges and opportunities risk managers around the globe will continue to face? ​​​​​

Source: CME Group

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