How is actual natural gas traded?

Discussion in 'Commodity Futures' started by mrman500, Oct 8, 2008.

  1. Is the actual product traded electronically or via phone?
  2. sledged


    there are physical natural gas trades brokered through ICE, not sure about a bilateral market if it exists.
  3. We trade both ways and suprisingly do alot of trades over AOL IM. IM lets you work on multiple deals simultaneously. ICE is just a trading interface on the physical side, the deals are bilateral. You just do not know who the counterparty is until you execute. It has a credit setting function that allows you to turn counterparties on and off, and also lets you set daily and/or monthly limits to each counterparty. The daily spot market trades actively from about 7 a.m. to 10:30 a.m. CST. Trades continue but liquidity dries up and it stops at 11:30 a.m. at which time next day timely nominations (scheduling) for the pipelines is due.

    There is alot more to it than just the little I layed out, but that is generally how the next day spot market on physical natty works.
  4. If you haven't traded natty and and want to get into it be forewarned.

    In my opinion it is the toughest trade out there.

  5. Voice brokers are also used as well such as ICAP and Amerex.
  6. Everything mentioned by others is true, but no one has mentioned the flagship NYMEX NG contract that does trade electronically on the CME Globex platform. ICE offers both physical and financial natural gas contracts, but the size of the financial is roughly 7.5 times the size of the NYMEX contract and is generally used by the bigger institutions as a result. You can also trade the QG on NYMEX which has a financial penultimate settle and is 1/4 the size of the NG contract, but it trades in half penny increments as opposed to the 0.1 cent tick in NG, and the liquidity isn't as good.
  7. How long have you been in the biz?? what are your thoughts on natty
  8. I have been in natty for 12 years, 8 years in physical. I will tell you more in a bit, I am being summoned by the wife to go to a party.
  9. Bump... PAPA ROACH, I'd be interested to hear your comments.

    I know people who trade physical. Seems to be a lot of "who you know."
  10. The physical trading is very much so "who you know." The phys/paper markets seem to be two different worlds, with the physical traders being more of the older crowd who have been in the industry for years, and established long term friends.

    The paper markets tend to be younger guys who got started on the floor in the late 90s / early 00s, then moved "upstairs." They will usually talk to anyone who can bring the numbers.
    #10     Mar 3, 2009