Natural Gas Futures Trading
About Natural Gas
Natural gas accounts for almost a quarter of United States energy consumption. Natural gas is a gaseous fossil fuel largely made up of methane. It is found in oil fields and natural gas fields, and in coal beds. The fuel is commercially produced from oil fields and natural gas fields. Gas produced from oil wells is called casinghead gas or associated gas. The largest two natural gas fields are in Iran and Russia.
Trading Natural Gas
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 spread between natural gas futures and electricity futures called the spark spread can be used to manage risk exposure in the energy markets.
Two financially-settled natural gas (HH & HP) contracts are available for trading on the CME Globex system and clears through the New York Mercantile Exchange clearinghouse. 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 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.
Henry Hub Natural Gas Contract Specifications:
Trading Unit: 10,000 million British thermal units (mmBtu).
Trading Hours: Open outcry trading takes place from 10:00 AM until 2:30 PM ET. Electronic trading is available from 6:00 PM until 5:15 PM via the CME Globex trading platform, Sunday through Friday.
Minimum Price Fluctuation/Tick Value: $0.001 (0.1¢) per mmBtu ($10.00 per contract).
Trading Months: NG can be traded for 72 consecutive months starting with the next calendar month.
Trading Symbol: NG