ICE to Open Alternative European Natural Gas Market in London Following EU Price Cap

ICE to Open Alternative European Natural Gas Market in London Following EU Price Cap

By Will Horner

Intercontinental Exchange Inc. on Friday outlined plans to open a parallel pure gasoline market in London, to assist merchants sidestep lately accredited EU measures to cap the area’s benchmark gasoline costs.

ICE, which at present operates the Amsterdam-based Title Transfer Facility–considered the benchmark for European gasoline prices–said it goals to launch the brand new market on Feb. 20, 5 days after the European Union’s value cap comes into impact.

The new market would provide futures and choices which mirror the TTF contracts however will not be topic to the EU’s value cap, ICE stated. The trade operator, which final month warned towards the brand new guidelines, stated the parallel trade would function an insurance coverage possibility for its clients and assist merchants handle danger.

The trade additionally stated its ICE Endex hub, on which the TTF contracts commerce at present operates, would change its guidelines to adjust to the EU’s new guidelines which come into drive on Feb. 15.

“ICE’s objective is to create markets to enable our clients to handle their danger and now we have an obligation to our clients to present options to the issues they face,” stated Trabue Bland, senior vice chairman for futures exchanges at ICE.

The EU’s value cap, which was agreed upon final month, caps TTF gasoline costs at EUR180 a megawatt hour in the event that they breach that degree for 3 consecutive days and are additionally on the time not less than EUR35 greater than a measure of worldwide liquified pure gasoline costs.

The EU measures purpose at stopping a repeat of the volatility and sharp value spikes which characterised the continent’s gasoline market final 12 months. The area’s gasoline costs surged to report ranges following Russia’s invasion of Ukraine and Moscow’s regular curtailment of its gasoline provides to Europe, hitting a excessive of virtually EUR350 MW/h in August.

A hotter-than-expected winter and ample provides of imported U.S. LNG have seen costs tumble in latest months. Prices fell additional Friday, down 1.7% to EUR53.86 MW/h, their lowest degree since September 2021.

The new London-based gasoline market would commerce on the ICE Futures Europe trade which already handles the U.Ok.’s benchmark gasoline market amongst others.

Write to Will Horner at [email protected]