What is the natural gas futures market?

July 29, 2024  eia.gov

Excerpt.

The natural gas futures market is a marketplace where standardized contracts for the future delivery of set natural gas volumes are traded. Most natural gas futures are bought and sold in the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE). Futures contracts allow participants to manage their exposure to market volatility by locking in a price today for a future purchase or a future sale of a physical commodity.

Natural gas futures contracts settle both physically and financially. Although other commodity futures might only have a financial obligation, this marketplace also bears the responsibility of physical delivery. A buyer must agree to receive natural gas at a future date at a specified location for a predetermined price, while a seller agrees to deliver the natural gas under these terms. However, less than 2% of NYMEX contracts are physically delivered.

Link to full article:  https://www.eia.gov/todayinenergy/detail.php?id=62605