Global exchange operator Intercontinental Exchange Inc. (ICE) saw record activity across its Title Transfer Facility (TTF) and Japan Korea Marker (JKM) natural gas benchmarks in January.
Citing “volatile market conditions set against the ongoing liberalization” of liquefied natural gas (LNG), ICE reported record monthly futures and options volumes for TTF and JKM contracts.
“Customers from every corner of the world are turning to our TTF and JKM benchmarks to provide much needed transparent price discovery and enable them to seamlessly transfer risk,” said ICE’s Gordon Bennett, managing director, Utility Markets. “This was particularly needed during the recent turbulence experienced across natural gas markets.”
TTF and JKM are cleared at ICE Clear Europe. European benchmark TTF futures hit record open interest (OI) of about 1.9 million contracts on Jan. 27 and TTF futures and options hit a record daily volume of more than 347,500 contracts on Jan. 12. TTF futures and options also hit a record monthly volume of four million contracts in January, beating the previous record set in January 2020.
Asian benchmark JKM hit a combined futures and options OI record of 125,000 contracts on Jan. 14, and JKM futures hit a record monthly volume of more than 91,500 contracts in January.
January was a particularly turbulent month for global natural gas prices, with Asian LNG skyrocketing above $30/MMBtu early in the month. Spot prices in Spain also shattered records early in the new year.
Energy Aspects’ James Waddell, a senior global gas analyst, said severe cold, production outages, shipping constraints and a scramble to find supplies were a few of the factors behind the meteoric rise in Asian LNG prices in early January.
The uptick in market activity since November has prompted analysts at Morgan Stanley to increase their 2021 European natural gas price forecast by 35% to $5.80, mainly on stronger forecast demand and lower LNG imports. The bank also increased its JKM spot forecast to $7.50 this year from an earlier projection of $4.50.
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