Although no panic buttons are being pushed yet, the Kansas CityBoard of Trade (KCBT) is getting increasingly worried about therecent lack of activity on its gas futures contract. There has beenno estimated volume since July 29, and as a result, open interesthas been stuck at 669 positions.

“We’re talking to our customers, trying to find out how to bringthem back to the trading floor,” said Candice Bowman, vicepresident of marketing for the KCBT. “I’ve been here since tradingstarted, and I can’t remember a longer drought.”

One Southwest trader, who wished to remain anonymous, said theproblems go back farther than this past week. “For quite a whilenow, the only semi-liquid month has been the prompt month, whichseverely limits its usefulness,” the trader said. Producers willlook at it in as a pricing alternative, but often the offers theyput up there are out of the market and therefore never get hit. Itbecomes somewhat useful during bidweek as a form of pricediscovery. I will look at where the prompt month is trading andthat will give me an indication where I want to be in the market.”

The recent situation is a far cry from February of 1998, whenthe KCBT continuously broke its own records for volume traded andopen interest numbers. In that month, the KCBT open interestsurpassed 9,000 and estimated volume reached over 700 (See DailyGPI, Feb 11).

KCBT gas futures were launched in August 1995. The contract hasa delivery point of PG&E Transmission and Texas’ Permian-WahaHub in West Texas.

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