On Wednesday, trading in US natural gas futures was suspended for more than half an hour. This is the second major disruption in one of the world’s most active commodity markets in a month. Metal contracts were also affected.
CME Group said that trading in natural gas futures and options on its Globex electronic trading platform has resumed after a technical issue caused a trading disruption.
The Chicago Mercantile Exchange (CME) said that natural gas futures trading was suspended for about 50 minutes and options trading for about 35 minutes. The trading halt occurred as the March natural gas futures contract expired, a key date for traders looking to roll over their positions. Natural gas prices rose and closed up 1.9% at $2.969 per million British thermal units.
Metal trading on the Globex exchange, including that of gold and copper, was also suspended for a while and did not resume until around 1:45 p.m. Central Time.
Nicky Shiels, head of metals strategy at MKS PAMP SA, said the latest glitch “eroded confidence in liquidity and price discovery at a time when the market was already dysfunctional due to sharp price swings.”
In late January, the New York Mercantile Exchange (a futures exchange owned by the Chicago Mercantile Exchange) suddenly imposed a two-minute emergency trading halt at the close of trading, which infuriated natural gas traders. This move distorted the settlement price and further confused traders who were already dealing with abnormally high volatility due to cold weather.
The Chicago Mercantile Exchange (CME) said last month that its natural gas futures contracts set a new single-day trading volume record of over 2.5 million contracts on January 20, a 15% increase from the previous record set on November 2018. With the growth of U.S. liquefied natural gas exports and the booming development of artificial intelligence, the demand for natural gas has increased significantly, and the price volatility has also intensified.
This year, as prices soared to new highs, volatility also rose sharply, especially for gold and silver. The volume of metal contracts on the Chicago Mercantile Exchange (CME) also hit a record high.
The New York Mercantile Exchange (Nymex) is one of the two major exchanges in the United States where huge volumes of natural gas futures contracts are traded. These contracts reflect the price of delivering fuel to the so-called Henry Hub benchmark location in Erath, Louisiana, on a monthly basis.
The trading of natural gas futures in the United States is highly active. This is not only because the United States is the largest producer and exporter of natural gas, but also because natural gas accounts for approximately 40% of the country’s electricity generation.
Globex is CME’s electronic trading platform, which is used for futures and options trading and allows traders to directly input trades, view order books and access real-time price data.
