LNG futures trade volumes in Q4 2023, 12.5 per cent increase for the year
Jan 04, 2024
New Delhi [India], January 4 : Liquefied Natural Gas (LNG) futures trade volumes in the fourth quarter of 2023 achieved a historic high, marking a robust end to the year.
According to S&P Global Commodity Insights, data from financial exchanges and brokers revealed that trade volumes during Q4 reached an unprecedented 182,971 lots, surpassing the previous record set in Q3 2023 at 164,748 lots.
The overall LNG futures trade volumes for 2023 witnessed a substantial 12.47 per cent year-on-year increase.
Derivative contracts traded on both the Intercontinental Exchange (ICE) and the Chicago Mercantile Exchange (CME) throughout 2023 totalled 636,607 lots, equivalent to approximately 122.4 million metric tons or 1,929 cargoes.
However, in contrast to the surging trade volumes, open interest for LNG futures in 2023 experienced a 10.6 per cent year-on-year decline, settling at 935,167 lots.
LNG futures trade volumes in December 2023 exhibited a 36.62 per cent month-on-month decrease but saw a significant 49.87 per cent year-on-year increase.
On ICE alone, December contracts totalled 41,843 lots, corresponding to around 8.05 million metric tons or 127 cargoes.
Among the monthly contracts for Q1 2024, ICE recorded the highest traded volumes at 16,297 lots, constituting 38.95 per cent of total trade volumes in December.
ICE also reported 82,575 lots of open interest as of December 29, including 82,350 lots for JKM LNG futures and 225 lots for JKM LNG Balmo-ND futures.
Asia-Pacific spot LNG prices witnessed a downward trend in December, influenced by low demand and comfortable inventories across the region.
Despite a cold snap in some areas, LNG consumption did not see a significant uptick. Chinese players, in particular, showed little buying interest amid stable consumption.
Buying interest in China emerged towards the end of December when second-tier companies re-entered the market.
This resurgence was attributed to the Platts JKM, the benchmark price for LNG delivered to Northeast Asia, becoming more competitive than domestic gas prices in China. The Platts JKM ranged between USD 11-USD 15/MMBtu in December, compared to the higher range in November at USD 15-USD 17/MMBtu.
South Korea and Japan exhibited tepid demand for spot LNG cargoes in December, influenced by comfortable inventories and a limited appetite for interbasin arbitrage opportunities.
Despite the spread between Asian and Northwest Europe LNG prices staying at a premium, uncertainties at the Panama and Suez canals contributed to a cautious market environment.
The LNG futures market remains dynamic, navigating various factors that impact trade volumes, open interest, and regional consumption patterns.
The Q4 2023 and the overall yearly increase underline the resilience and growth potential of LNG futures trading.
