Natural Gas Glossary
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A regional interstate natural gas pipeline system that transports natural gas from pipeline interconnects in New Jersey and southeastern New England to major markets in New England. A market trading options on natural gas in which prices in succeeding delivery periods are progressively lower than in the nearest delivery period.
Also known as an "inverted market. Basis is most often traded in the form of swaps. By swapping the price of a commodity at one physical location for the price at a different location, traders can capture the basis differential between those two points.
One BCF is one billion cubic feet of natural gas at standard distribution pressure of The five business days immediately preceding the first of the month. During bid week, all financial positions must be closed out.
Financial positions serving as hedges for physical natural gas transactions must be converted into physical supplies. Physical trading activity during bid week is the basis of the price index numbers published in Inside F.
A bureau in the U. Department of the Interior that manages the trading options on natural gas natural gas, oil and other mineral resources on the outer continental shelf. The amount of energy required to raise the temperature of one pound of water by one Fahrenheit degree. One BTU is equivalent to calories, 0. Trading options on natural gas trading of physical natural gas during the month in which delivery will be taken. The majority of cash trading is for next day gas and is conducted during the morning hours prior to and shortly after the opening of the futures market day session.
Cash trading for Saturdays, Sundays and Mondays as well as Tuesday, in the event of a Monday holiday is done on Friday mornings unless the month ends on a weekend, in which case cash trading for the final days of the current month occurs on Thursday and trading for the first of the following month occurs on Friday. One CCF is one hundred cubic feet of natural gas at standard distribution pressure of The trading options on natural gas of demarcation between a natural gas transmission pipeline and the local distribution company.
The city gate is the most common point of sale in the retail natural gas business, since transfer of control and risk of loss between the marketer who is also typically the shipper of record on the pipeline and the LDC occurs at this point. One crude oil futures contract represents 1, barrels 42, gallons of product. In addition to the base symbol, the ticker symbol for a NYMEX futures contract contains a letter indicating the month and two digits indicating the year.
A regional interstate natural gas pipeline system that transports natural gas from pipeline interconnects in Appalachia to markets in Trading options on natural gas, Ohio, Pennsylvania, upstate New York and Virginia. TCO is divided into 10 zones which are further divided into dozens of individual market areas. TCO is owned by NiSource. An independent government agency created by Congress in to regulate the trading of commodity futures and options.
Each week, the CFTC publishes a trading options on natural gas showing the total number of open futures and options contracts in the markets it oversees.
A market situation in which prices in succeeding trading options on natural gas periods are progressively higher than in the nearest delivery period. The difference in price between corresponding present and future delivery periods is referred to as the "carry" in the market.
The opposite of contango is backwardation. An indicator of space cooling demand. The cooling degree days for a single day equal the average of the highest hourly temperature and the lowest hourly temperature for the day minus 65 degrees Fahrenheit, if greater than or equal to zero.
A cabinet-level federal agency created in to replace the Federal Energy Administration. The Department manages national energy policy, nuclear power and nuclear weapons programs, and the national energy research labs. A regional interstate natural gas pipeline system that transports natural gas from pipeline interconnects in Appalachia to markets in Ohio, Pennsylvania, upstate New York and West Virginia.
For trading purposes, Dominion is divided into north markets that include the upstate New York utilities and south markets that include Ohio, most of Pennsylvania and West Virginia. Dominion owns and operates the largest collection of underground natural gas storage assets in the U. Dominion is owned by Dominion Resources.
One dekatherm is equal to 10 therms. An agency within the U. EIA provides energy data, forecasts and analyses. A weekly report that estimates the total working natural gas held in underground storage facilities in the continental U.
Inventories are reported separately for three separate regions: The report is normally released every Thursday morning at A weekly report that estimates a variety of activity in the U.
The most closely watched numbers are the petroleum stocks, which indicate the total quantities of crude oil, distillate fuel oil, motor gasoline, and other petroleum distillates held in domestic storage.
The report is normally released every Wednesday morning at An intrastate natural gas pipeline that transports natural gas from a Canadian import point in Chippawa, New York to markets in upstate New York.
Empire State is owned by National Fuel Gas. An independent federal agency that regulates the interstate transmission of natural gas, oil and electricity.
FERC also regulates the storage of natural gas and the importation of liquefied natural gas. The commission is composed of up to five sitting commissioners that are appointed by the President and must be confirmed by the Senate. The commission is staffed by economists, engineers, attorneys, policy experts and administrative law judges who analyze filings made by industry participants and advise the commission on its decisions.
Force majeure clauses are intended to excuse a party only if the failure to perform could not be avoided by the exercise of due care. A fixed percentage of the natural gas received by a pipeline or LDC that is "lost" between the receipt point and the delivery point. For pipelines, the natural gas is trading options on natural gas used to fuel natural gas combustion motors that drive the compressors that maintain pressure on the pipeline.
For LDCs, fuel loss compensates for gas lost to leaks, theft and faulty measurement. Fuel loss is generally expressed as a percentage of the quantity received into the pipeline or LDC. To calculate fuel loss based on the delivered quantity, divide the delivered quantity by 1 minus the fuel loss percentage, then subtract the delivered quantity. A derivative transaction between two counterparties wherein the seller agrees to fix the price for a predetermined quantity of an underlying commodity, security, bond or currency in a specified delivery period.
The buyer becomes "long" the futures position while the seller becomes "short. Futures are traded exclusively on regulated exchanges such as the NYMEX and traders settle up with the exchange each day based on the market value of their positions. A natural gas industry trade trading options on natural gas published each business day by Platts. In each issue, Trading options on natural gas Daily publishes the results of a phone survey of traders and other industry participants.
The survey provides indicative prices for next day physical natural gas delivered to a large number of trading points throughout the continental U. For each point, Gas Daily publishes an absolute high and low price, a common high and low price and a midpoint price. When traders refer to the "Gas Daily index" price, they are generally referring to the midpoint price. The process of collecting natural gas flowing from numerous wells and bringing it together into pooling areas where it is received into transmission pipelines.
Gathering systems trading options on natural gas small systems of mostly low-pressure pipe that connect the numerous wells dotting producing fields to the interstate transmission system. Gathering systems are typically state-regulated as they do trading options on natural gas cross state boundaries.
An Internet-based electronic trading system operated by the Chicago Mercantile Exchange. Globex trading opens Monday through Thursday at 3: The Sunday Globex session opens at 7: A regional interstate natural gas pipeline system that transports natural gas from an interconnect with Tennessee in Massachusetts to markets in coastal New Hampshire and Maine. Granite State trading options on natural gas owned by Unitil. An indicator of space heating demand.
The heating degree days for a single day equal 65 degrees Fahrenheit minus the average of the highest hourly temperature and the lowest hourly temperature for the day, if greater than or equal to zero.
A major pipeline interconnect point located in Louisiana. The Henry Hub is also a highly liquid trading point, with numerous buyers and sellers of both physical natural gas and financial derivatives. Contracts are traded on each of the remaining months in the current calendar year plus five additional calendar years. At the end of trading on the third-to-last business day of each month, the nearest prompt month contract expires and the next delivery month becomes the new prompt month.
One heating oil futures contract represents 1, barrels 42, gallons of product. In options trading parlance, a contract that could be exercised for a gain at current market prices. The opposite of "in the money" is "out of the money.
A natural gas industry trade journal published each month by Platts. In each issue, IFGMR publishes the results of a phone survey of traders and other industry participants. The survey provides indicative prices for physical monthly baseload supply delivered to a large number of trading points throughout the continental U. An electronic trading exchange for energy products and precious metals derivatives. Trades are financially settled between counterparties, trading options on natural gas between counterparties and the exchange.
This requires counterparties to independently establish and monitor creditworthiness with each other before trades can be conducted. A regional interstate natural gas pipeline system that transports natural gas from a Canadian import point in Waddington, New York to interconnects and trading options on natural gas in southeastern New England and Long Island.
The final price at which the financial settlement of all open futures contracts for a particular commodity and delivery month occurs. The price determined by the NYMEX is actually an average of all trading activity in the last 30 minutes of trading. This is done to prevent an individual or a small group of traders from engaging in manipulation of the price of a futures contract in the waning moments of trading.
The ability of a natural gas pipeline to effectively "store" small quantities of gas on a short-term basis by increasing the operating pressure of the pipe. Most pipelines use line pack as a resource to help manage the load fluctuations trading options on natural gas their systems, building up line pack during periods of decreased demand trading options on natural gas drawing it down during periods of increased demand.
Natural gas that has been cooled and trading options on natural gas into a liquid state in order to more efficiently transport it from producing regions to market. Most LNG is produced in oil-rich, equatorial countries with little use for trading options on natural gas gas for space heating, such as Algeria, Trinidad and Qatar.
It is then transported by ship to import facilities where it is stored and ultimately vaporized and delivered into the pipeline system.