On 20th February, the APGA sent a letter the Acting Chair of the Commodity Futures Trading Commission (CFTC), Mark Wetjen, asking that the commission look into the 10% price spike in the February 2014 New York Mercantile Exchange (NYMEX) Henry Hub contract, which occurred in the final hours of trading on the contract on January 29th of this year. On the final day that the monthly contract on NYMEX traded, natural gas for February delivery jumped 52.4 cents to US$ 5.557 / thousand Btu. This represents the highest closing price since January 25th 2010.
In the letter, the APGA urged the CFTC to review the trading activities that occurred to ensure that natural market forces, and not excessive speculation or other market abuses, were the causes of the 10% price spike. The letter also communicates that most APGA members purchase gas under a contract prices off a price index. Give the extent that price indices now track NYMEX, the NYMEX contract plays an important role in how much public natural gas systems, and in turn their customers, pay for natural gas. The letter states that while there is no evidence of manipulation and the price volatility that occurred may ultimately have been the result of natural market forces as opposed to market manipulation, there is a need for the CTFC may ultimately have been the result of natural market forces as opposed to market manipulation, there is a need for the CFTC to review the trading activities that occurred that day to ensure that the market is liquid and operating correctly.
A copy of the letter is available at www.apga.org/correspondence.
Edited from various sources by Claira Lloyd.
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/21022014/natural_gas_price_spikes_review181/