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| Henry Hub Natural Gas |
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Natural gas accounts for almost a quarter of United States energy consumption, and the NYMEX Division natural gas futures contract is widely used as a national benchmark price. The futures contract trades in units of 10,000 million British thermal units (mmBtu). 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. An options contract and calendar spread options contracts provide additional risk management opportunities.
Two financially-settled natural gas (HH & HP) contracts are available for trading on the CME Globex® system. The HH contract settles on the same date as the physically-delivered NG contract and HP is a penultimate contract. Both contracts are listed for 72 months.
The spread between natural gas futures and electricity futures – the spark spread – can be used to manage price risk in the power markets.
Because of the volatility of natural gas prices, a vigorous basis market has developed in the pricing relationships between Henry Hub and other important natural gas market centers in the continental United States and Canada. The Exchange makes available for trading a series of basis swap futures contracts that are quoted as price differentials between approximately 30 natural gas pricing points and Henry Hub. The basis contracts trade in units of 2,500 mmBtu on the NYMEX ClearPort® trading platform. Transactions can also be consummated off-Exchange and submitted to the Exchange for clearing via the NYMEX ClearPort® clearing website as an exchange of futures for physicals or exchange of futures for swaps transaction.
The NYMEX miNY™ natural gas futures contract, designed for investment portfolios, is the equivalent of 2,500 mmBtu of natural gas, 25% of the size of a standard futures contract. The contract is available for trading on the CME Globex® electronic trading platform and clears through the New York Mercantile Exchange clearinghouse. |
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