Trading of natural gas futures contracts on the New York Mercantile Exchange could easily double in 2 years, says Nymex Pres. R. Patrick Thompson.
Thompson said gas futures trading amounted to 2,500-3,000 contracts/day a year ago but now is about 12,000/day.
He said the gas futures market, established only 18 months ago, could increase to 30,000-40,000 contracts/day in 2 years.
Thompson explained that due to environmental considerations and the thrust of the newly enacted omnibus energy bill, natural gas will become the fuel of choice. "The potential for natural gas contract may be greater than the crude oil contract down the road."
Interest in heating oil contracts also may increase. He explained that more states are using that contract to limit their outlays for heating oil.
And he noted the energy bill requires the Department of Energy to study possible use of futures and options to protect federal appropriations for low income home heating oil assistance programs from price surges.
Nymex has no plans to end trading in sour crude oil contracts, introduced last February.
"That market has proved to be fairly illiquid," Thompson said. "Many of the crudes that come to the Gulf Coast are either restricted in their trading or are embargoed. Many producing nations have those trading restrictions. That is the biggest obstacle we have to overcome."
Nymex is pleased with development of the Gulf Coast unleaded gasoline contract, introduced Sept. 18. About 1,800 contracts have been traded, "which isn't bad for a contract only a month old."
Thompson said contracts may provide the industry a proxy market value for methyl tertiary butyl ether (MTBE). Subtracting transportation costs from the difference between Gulf Coast and New York Harbor contracts could yield the value of MTBE.
Nymex is still considering trading in crack spread contracts.
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