ICE reports record breaking volumes in Natural Gas Liquids (NGL) futures: +66% YoY in Q3’23

Rick Steves

“Hedging the U.S. Gulf Coast and Middle East LPG export routes to the Far East are important for our customers who, through the freight futures, are able to hedge their exposure across their entire LPG portfolio from production to shipping to consumption.”

natural gas supply

Intercontinental Exchange, Inc., the powerhouse behind data, technology, and market infrastructure in the global energy sector, announced unprecedented trading activity in its natural gas liquids (NGLs) markets. The surge comes as customers grapple with fluctuating NGL prices, further emphasizing the vital role of hedging in energy commodities.

ICE disclosed that its NGL futures saw an astounding 718,757 lots traded in Q3 2023, a 66% jump year-over-year. Open interest in the same complex surged by 50% to set a one-day record of 334,553, equivalent to over 650 million barrels on September 29, 2023.

Higher demand for NGL hedging to manage volatility

“As customers manage volatility in the price of NGLs driven by global energy dynamics, we are seeing higher demand for NGL hedging,” said J.C. Kneale, Vice President, North America power, natural gas and NGLs at ICE.

The markets for Argus and OPIS price assessments-based futures in propane, butane, ethane, and natural gasoline have witnessed growing participation. Players from diverse geographies, including the U.S. Gulf Coast, EMEA, and Singapore, are increasingly active, spotlighting a global need to manage exposure to NGL price fluctuations.

Open interest in ICE’s liquid petroleum gas (LPG) freight futures has also shattered records, hitting 7,177 contracts in September. These futures are vital hedging tools for managing freight price risk on major LPG export routes from the U.S. Gulf Coast to Europe and the Far East and from the Middle East to the Far East.

“Hedging the U.S. Gulf Coast and Middle East LPG export routes to the Far East are important for our customers who, through the freight futures, are able to hedge their exposure across their entire LPG portfolio from production to shipping to consumption,” added Kneale.

The surge in NGL and LPG futures trading complements ICE’s extensive energy markets portfolio, which already includes established benchmarks like ICE Brent, Gasoil, ICE Dubai (Platts), Henry Hub, and TTF natural gas. Across this diverse portfolio, open interest has climbed 13% year-over-year, standing at 48.3 million contracts.

The explosion in trading activity is more than a mere statistic; it signifies the complexities and vulnerabilities entailed in global energy markets today. As volatility looms large, hedging strategies, as facilitated by platforms like ICE, are becoming indispensable in navigating the undulating landscape of energy commodities.

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