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First Look - Record number of natural gas options trade on the CME

Oil is trading higher, reversing losses from yesterday
- Yesterday, prices fell more than $2/Bbl on reports of a ceasefire between Israel and Hezbollah
  - It is still unclear if Hezbollah will accept the terms of the ceasefire
Exxon sees significantly higher oil output unlikely in next few years (BBG)
- Despite calls from president-elect Donald Trump to raise oil and gas output, Exxon’s upstream president said, “I think a radical change is unlikely because the vast majority, if not everybody, is primarily focused on the economics of what they’re doing”
- It is expected that more federal lands will be opened for drilling
- Many of the larger US operators are taking a longer-term approach to production, and weighing when to bring wells online against their overall inventory

The December 2024 natural gas futures contract (NGZ24) expires today. Cooler weather patterns over the past month have contributed to a notable price increase, with the contract climbing from $2.66 at the beginning of the month to $3.35 as it approaches expiration.
- On Nov 22, the CME group reported that Henry Hub set a single-day options record amid a cold front
- US gas inventories will be reported on Wednesday this week due to the holiday on Thursday
- AEGIS Clients: Be on the lookout for a Holiday’s best hedging practices from your strategist today. Timing of trades and having an execution plan can help navigate possible liquidity issues around major US holidays
Record natural gas options
- The CME reported that options on Nymex Henry Hub reached a record 561,379 contracts on Nov. 21, surpassing the previous high of 506,500 contracts set back in Nov. ‘18
- “The US is entering the winter season while production is falling, creating price volatility and risk that needs to be managed in the natural gas markets,” said Peter Keavey, Global Head of Energy and Environmental Products at CME Group.” (PGJ)
- In addition to the options record, Nov. 21 marked the highest volume day in 2024 for Natural Gas and options