One of the most popular contracts available for natural gas trading is the NYMEX Henry Hub Natural Gas CME Group Futures (NG). Natural gas is the third largest physical commodity futures contract in the world and NG futures serve as the global benchmark for this market.
Henry Hub is the largest natural gas hub in North America. As a link for several natural gas interconnectors, the Henry Hub Natural Gas Futures delivery point is located in Louisiana. With an extensive infrastructure including interstate and intrastate pipelines, Henry Hub provides natural gas shippers and distributors with pipelines ready to access markets across the United States.
When local markets in the United States price their natural gas, they tend to do so based on a differential with Henry Hub. This spread takes into account regional market conditions, transmission costs and available transmission capacity between locations.
Trading natural gas futures has many advantages. Watch these 2 minutes to learn more:
Advantages of Trading Natural Gas Futures
- Very liquid markets – Traders can enter and exit positions with the world’s third largest physical commodity futures contract by volume. 400K contracts are traded daily, with 1 . 4M open interest.
- capital efficiency : Traders can control a large contract value with a small amount of capital. If used correctly, it is a powerful way to increase capital efficiency.
- physical settlement : NYMEX NG futures contracts are tightly linked to the spot market, which reduces slippage.
- Negotiation at time of settlement : TAS spreads for Natural Gas (NGT) are available on NYMEX in any combination of spreads for the first 12 consecutive monthly contracts.
- World reference : Natural gas is the third largest physical commodity futures contract in the world, with growing use in South America, Asia and Europe.
- Nearly 24 exchanges Hours: Natural gas trading 23 hours a day, 6 days a week. This provides more futures trading opportunities throughout the day.
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