From 2013 to 2014, the major U.S. natural gas exchanges experienced double-digit reductions in the number of contracts traded, according to a new report published by Cornerstone Research. The report, Characteristics of U.S. Natural Gas Transactions—Insights from FERC Form 552 Submissions as of May 16, 2015, shows that Intercontinental Exchange Inc. (ICE) volume declined by 22 percent from 2013 to 2014, while natural gas products volume for the CME Group Inc. (CME) decreased approximately 12 percent. These decreases extended a multiyear trend of falling trading volumes during a time of increased natural gas production in the United States.
The volume of trading as measured by FERC Form 552 submissions also fell slightly in 2014. The trading activity reported in Form 552 submissions for 2014 totaled 118,901 tBtu, a decrease of 1.4 percent, transacted by 656 companies.
Dr. Greg Leonard, vice president and head of Cornerstone Research’s Energy and Commodities Practice, said “This past year the volumes of physical transactions reported to the FERC declined slightly at the same time that the major natural gas exchanges, ICE and CME, reported double-digit reductions in the number of trading contracts. These decreases in trading volume in combination with the increase in U.S. natural gas production mean that the average molecule of natural gas was traded fewer times during 2014 in its path from producer to consumer.”
“The U.S. natural gas market remains an unconcentrated industry. The industry continues to transact the largest portion of its transactions as next-month, index-price transactions.”
About FERC Form 552 Submissions: The Federal Energy Regulatory Commission (FERC) receives and compiles the most comprehensive information on trading activity and pricing methods in the U.S. natural gas trading markets. By supplementing the data from FERC’s Form 552 with proprietary classifications of market participants, Cornerstone Research adds deeper insight into the market activities and characteristics across the various types of participants.