Q4 2022 Energy Update

  • 14 Oct 2022
  • By CME Group

Crude Weekly options markets boosted by record participation during non-U.S. hours

WTI Crude Oil Weekly (LO1-LO5) options allow market participants to precisely manage their exposure to the world’s most liquid commodity with expirations every Friday. Over the last several years, Crude Weekly markets have grown significantly in tandem with sustained increases in non-U.S. hours trading.

This year, LO1-LO5 volumes have grown 34% year-on-year to a record 5.5K lots per day. Average open interest also reached a record of 11.3K contracts with 21% of total volumes originating during non-U.S. hours, the highest level ever.

Source: CME Group

Henry Hub Natural Gas futures and options around-the-clock liquidity

Henry Hub Natural Gas futures and options markets are liquid 24 hours a day, with screen markets throughout the curve in futures and through Summer 2023 in options. Over 12% of Henry Hub options trades originated outside of North America in 2022, as U.S. gas exports climbed to record levels. Henry Hub futures non-U.S. hours trading activity remained near record levels at over 8% of total volume.

Surging global gas prices spill into the refined products and ammonia markets

Global gas and liquefied natural gas (LNG) markets remain volatile. The Russian curtailment of gas flows to European countries has contributed to a 500% increase in European gas prices. In the U.S., the price of Henry Hub natural gas has more than doubled compared to long-term averages. This surge in global gas prices has spilled into the refined products and ammonia markets, elevating the cost of production and adding to growing demand when inventory is already low.  

The link between natural gas and other energy markets creates both challenges and opportunities for firms and traders. CME Group benchmark WTI Crude Oil and Henry Hub Natural Gas futures and options are useful tools for managing increasingly volatile markets and the interplay with other key energy benchmarks.

Graph: Q4 2022 TTF gas more expensive than diesel and propane (Source: CME Group)

Source: CME Group

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Growth continues for Micro WTI futures and options

YTD, Micro WTI Crude Oil (MCL) futures have traded 127K lots per day with record average open interest in September – 87K contracts. Traders from across the globe have adopted MCL with nearly 40% of volume trading during non-U.S. hours.

In June 2022, Micro WTI Crude Oil options were launched, offering monthly (MCO) and Friday weekly (MW1-MW5) expirations, giving traders of all sizes access to the world’s most liquid crude oil contract.

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Argus Crude Market Ticker (ACMT) on CME Direct

CME Group has partnered with Argus to offer CME Direct users the opportunity to gain price discovery into intraday physical crude markets for WTI Midland and WTI Houston alongside futures prices thought the ACMT.

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Listing schedule expansion for N-GEO futures

Effective October 24, participants using Nature-Based Global Emissions Offset (N-GEO) futures will have the opportunity to trade out two years further to December 2027. This was announced after increased trading activity was seen in the Dec-24 and Dec-25 contract months and traders sought to extend their positions further out the curve. Currently, the Dec-22 contract accounts for 43% of N-GEO open interest, while the Dec-25 contract already accounts for 5%. 

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Trade global gas on Trayport Joule Direct

With four simple steps, you can trade NYMEX Energy products using Trayport Joule Direct.

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Global Command Center (GCC) is the market operations and customer service desk for electronic trading. We handle inquiries, issues, and support requests from CME Globex and CME ClearPort customers 24 hours a day.

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Data as of September 30, 2022 unless otherwise specified.