About S&P Global Commodity Insights

Powering the Markets

S&P Global Platts and IHS Markit ENR combine to become S&P Global Commodity Insights. S&P Global Commodity Insights brings together highly complementary capabilities to power the markets of the future.

Assessments & Benchmarks

We engage with market participants and evolve rigorous methodologies for assessments that reflect a commodity’s true value. Along with news and market commentary, our assessments help you make successful trading decisions.

Workflow Solutions

We partner with you to enhance workflows, increase efficiency and optimize business processes by leveraging AI-driven software and applications, integrated platforms and machine delivery.

Research & Insights

We develop deep, interconnected industry analysis and forecasts across the full energy and commodities value chain. Subscriptions to our market insights and analysis include access to subject matter experts.

Conferences & Advisory Solutions

We provide consulting services on current challenges such as renewables and energy transition, and host education sessions, webinars, and premier events like CERAWeek and Global Power Markets. 

Together we are helping companies like yours with highly relevant information, expert analysis, and workflow solutions you need to maintain your competitive edge.

Manufacturers’ group asks CFTC to probe Jan. 27 Henry Hub futures price spike

An industrial trade group has urged the US Commodity Futures Trading Commission to investigate the expiring natural gas futures contracts for Jan. 27, pointing to a 46% one-day price increase and warning of costs to consumers and manufacturers.

At issue is the NYMEX Henry Hub prompt-month contract, which jumped $1.988, or 46%, to settle at $6.265/MMBtu on Jan. 27.

Percentagewise, the Jan. 27 price surge was the largest day-on-day price movement in NYMEX Henry Hub history, according to records dating back to Aug. 26, 1998. However, the NYMEX Henry Hub prompt-month saw a larger day-on-day movement on Feb. 24, 2003, when the contract jumped $2.53, or 38%, to $9.137/MMBtu.

The Industrial Energy Consumers of America wrote CFTC Chairman Rostin Behnam Feb. 2, asking the regulator to look into the role of derivatives, who benefited, and how the CFTC could prevent such a spike in the future. He also urged the commission to look into whether its expanded speculative position limits were a factor in the spike, and what role passive funds may have played. He also asked the regular to examine who was on either side of the closing price.

"The 46% price spike was an enormous cost increase to consumers and inflation," wrote Paul Cicio, president and CEO of the trade organization. "Using the US Energy Information Administration data for the previous year (February 2021), US natural gas volume was 3.0 Tcf. The February monthly volume times the difference of $4.28/MM/Btu and $6.26 per MM/Btu amounts to a $6.2 billion cost/price increase to consumers for their February 2022 natural gas."

Cicio noted that the February futures at one point jumped to nearly $7.35/MMBtu, and that trading was "so sharp" that it was paused dozens of times by circuit breakers aimed at maintaining orderly trading.

 

Market watchers' view

 

Market watchers have largely diagnosed the expiry-day price spike as a physical short squeeze, unrelated to market fundamentals, in which traders holding short positions needed to close out or deliver physical gas and had limited options. The price run-up accelerated in the final 30 minutes of trading, which some analysts presented as further evidence of a squeeze.

"God has not invented a fundamental that would drive natural gas prices up $31,000 [per 10,000 MMBtu contract] in one day," Stephen Schork, principal at The Schork Report, said in a phone interview with S&P Global Platts on Jan. 27. The highest price of the session on Jan. 27 reached $7.35/MMBtu, nearly $3.10 higher than the contract's prior-day settlement.

Some analysts compared the Jan. 27 price movement to when WTI crude oil went negative in April 2020. Traders with long positions struggled to close out on the prompt-month's last day prior to expiry, which triggered a sell-off frenzy.

"It's a feature of financial futures," Daniel Myers, senior analyst at Gelber & Associates, told Platts in a Jan. 27 phone interview.

Connect Now

Other Articles

Skyrocketing Battery Metal Prices Could Pump Brakes on Surging EV Auto Sales

S&P Global Platts lithium prices up more than 200%, nickel costs rise nearly 35%, and cobalt cli...

Global light duty EV sales to rise to 26.8 mil by 2030: Platts Analytics

Global light duty electric vehicle sales reached a record high of 6.3 million units in 2021, up 102%...

Insight Conversation: Benedikt Sobotka, Eurasian Resources Group

Eurasian Resources Group CEO Benedikt Sobotka, at the helm of a diversified mining group which...

Infographic: Insufficient lithium supply could decelerate energy transition

Lithium is a key raw material for electric vehicles and energy storage systems, but the lack of inve...

Steel versus plastics: The race to sustainability

S&P Global Platts looks at the supply, demand, and price drivers of today’s growing recycled pla...

The rocky path to regional battery supply chains

Europe and the US are beefing up their battery metals supply chains, but are unlikely to overtake Ch...

Atlas of Energy Transition™

Navigating a pathway to a low-carbon global economy requires a new plan. The S&P Global Platts A...

Weak Links in the Supply Chain

From challenges to global trade, concerns in the energy sector, and upheaval in retail industry, cor...

China’s steel industry eyes major HRC capacity expansion in 2022-2023

China's hot-rolled coil capacity expansion is set to gain pace in 2022-2023 as the country marks a s...

Feeling the Heat: 5 Key Features of the Iron Ore Markets in 2021

After a rollercoaster year in the iron ore sector, Niki Wang takes stock of some of the biggest them...

Airbus, CFM to develop hydrogen combustion engine for aviation

Airbus and jet engine manufacturer CFM International are to partner on a hydrogen combustion demonst...

Breaking barriers to accelerate energy transition

Our new special report looks at how energy and commodity markets are responding to the decarbonizati...

China’s Dec manufacturing PMI rises, uptrend likely to continue in early 2022

The Chinese manufacturing purchasing managers index continued to rise in December at 50.3 points, wi...

ESG Spurs Mining Evolution

ESG factors are increasingly influencing decisions from board rooms to mining sites. Paul Bartholome...

Low-Carbon Metals: A Market for Premium Emerges

As demand for low-carbon aluminum and steel rises globally, a tiered market is emerging with premium...

Listen: Battery pack costs on the rise: will it slow down EV adoption?

For the first time in over a decade, battery pack costs started to increase —even in the low cost se...

Beijing Olympics adds extra factor to Q1 steel market

The first quarter of each year is often atypical of the year as a whole in China’s steel market due...