KCBT is "Concerned" about Inactivity
Although no panic buttons are being pushed yet, the Kansas City
Board of Trade (KCBT) is getting increasingly worried about the
recent lack of activity on its gas futures contract. There has been
no estimated volume since July 29, and as a result, open interest
has been stuck at 669 positions.
"We're talking to our customers, trying to find out how to bring
them back to the trading floor," said Candice Bowman, vice
president of marketing for the KCBT. "I've been here since trading
started, and I can't remember a longer drought."
One Southwest trader, who wished to remain anonymous, said the
problems go back farther than this past week. "For quite a while
now, the only semi-liquid month has been the prompt month, which
severely limits its usefulness," the trader said. Producers will
look at it in as a pricing alternative, but often the offers they
put up there are out of the market and therefore never get hit. It
becomes somewhat useful during bidweek as a form of price
discovery. I will look at where the prompt month is trading and
that will give me an indication where I want to be in the market."
The recent situation is a far cry from February of 1998, when
the KCBT continuously broke its own records for volume traded and
open interest numbers. In that month, the KCBT open interest
surpassed 9,000 and estimated volume reached over 700 (See Daily
GPI, Feb 11).
KCBT gas futures were launched in August 1995. The contract has
a delivery point of PG&E Transmission and Texas' Permian-Waha
Hub in West Texas.
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