Evolution has brokered the first ICE-cleared futures spread between the UK natural gas hub, NBP, and the U.S. Henry Hub benchmark. The Q4 2020 Henry Hub / NBP spread traded at -US$1.455, and the trade reflects the growing convergence of natural gas markets centered on global shipments of liquefied natural gas (LNG).
This trade was co-brokered between Evolution Markets’ London-based European natural gas team and the U.S. natural gas basis team in New York.
As LNG export terminals came online in the U.S., the UK and Europe were increasingly the final destination for shipments. The resulting need for instruments to hedge trans-Atlantic price differentials facilitated spread trading between major benchmark contracts, including Henry Hub in the U.S., the Dutch TTF hub, and the U.K.’s National Balancing Point (NBP).
While swap trading between Henry Hub and TTF has been active for some time, increased consumption of US-origin LNG in the UK has led to interest in Henry Hub / NBP spreads, as well. The trade brokered by Evolution is continuation of the trend toward global trading of natural gas.
For more information on global natural gas trading, including LNG, contact our natural gas desks in London (+44 (0)20 7264 4550) or New York (+1 914 323 0270).