CME launches U.S. LNG futures contract with physical delivery

LONDON (Reuters) – Exchange operator CME Group said on Wednesday it would launch a futures contract for liquefied natural gas (LNG) that is physically delivered at U.S. Cheniere Energy’s Sabine Pass export terminal, a move likely to increase transparency in the market. The contract, to be launched on Oct. 14, will have 24 delivery months, meaning a market participant in October could buy an August 2020 LNG cargo and trade it up until the delivery date. It will help buyers to manage risk, giving them exposure to the fastest growing source of LNG supply while at the same time shedding light on physical and future LNG prices in an nascent and opaque market. A number of other contracts have been launched in the past two years related to LNG and LNG shipping as supply of LNG and the infrastructure to both export and receive it has expanded rapidly. The CME, the Intercontinental Exchange and PEGAS have launched futures and options priced against the Japanese Korea Marker which has been published by commodity pricing agency S&P Global Platts for a decade has become a benchmark for Asian LNG prices. Most of the world’s LNG is bought under bilateral contracts, some lasting… continue reading

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Source: CTRM Center

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