APGA sent a letter to Acting Chair Mark Wetjen of the Commodity Futures Trading Commission (CFTC) asking that the commission look into the 10 percent 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 29, 2014.
On the final day that the monthly contract on NYMEX traded, natural gas for February delivery jumped 52.4 cents to $5.557 per MMBtu. This represents the highest closing price since January 25, 2010. Futures posted their largest one-day percentage gain since June 14, 2012.
In its letter, 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 for the 10 percent price spike. The letter also communicates that most APGA members purchase gas under a contract priced off of a price index. Given 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. APGA’s 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 CFTC to review the trading activities that occurred that day to ensure that the market is liquid and operating correctly.
A copy of APGA’s letter to the CFTC is available here.