NGX Canadian Natural Gas Index
The Natural Gas Exchange (NGX) is home to the NGX Canadian Natural Gas Index™, a dynamic continental benchmark for Canadian natural gas that offers investors exposure to AECO, Canada’s most liquid trading point for natural gas contracts. The NGX Canadian Natural Gas Index is a commodity index based on natural gas as posted in the NGX physical gas spot-month product on the Intercontinental Exchange (ICE). This Canadian dollar denominated index tracks the performance of the Alberta “one-month spot” physical market price.
The index is an Excess Return index where the return reflects an investment rolling from month to month and not any Collateral Return. The initial benchmark value of the index was set at 1000 as of December 19, 2007. The index is calculated at 2:30 PM ET (12:30 PM MT) each trading day.
NGX is Canada’s leading energy exchange and North America’s largest physical clearing and settlement facility. Since 1994, NGX’s unique market model has provided traders with one of the most highly liquid, secure and efficient environments available for trading and clearing natural gas and electricity contracts. NGX is based in Calgary and wholly owned by TSX Group Inc.
NGX formed a technology and physical clearing alliance with the Intercontinental Exchange (ICE), to better serve the North American natural gas and Canadian electricity markets. Under the arrangement, the cleared and bilateral markets for North American physical natural gas and Canadian electricity operated by NGX and ICE are offered together on ICE’s electronic commodities trading platform (the “ICE Trading Platform”). NGX also uses the ICEBlock system to electronically accept for clearing off-exchange transactions in financial gas and other energy products. In turn, NGX serves as the clearinghouse for cleared and off-exchange transactions.
Natural Gas Prices and Trading
Natural gas prices are determined in an open market like other commodities such as coffee, lumber and livestock. North American natural gas prices are affected by supplies of natural gas versus the demand for the fuel. When the demand is higher, the price tends to rise and when there is more supply than what is needed, the price lowers. Other influences on natural gas prices:
- Weather heating/cooling demand
- Electricity generation and pricing
- Pipeline transportation constraints
- Storage balances
- Liquified natural gas
Alberta Natural Gas Historical Spot Price
Some Facts About Canadian Natural Gas
- Canada is the third-largest producer of natural gas in the world and the number one supplier of natural gas imports to the U.S.
- In 2006, Alberta produced 5.081 trillion cubic feet of natural gas. Exports to the rest of Canada amounted to 1.169 billion cubic feet, and to the U.S. 2.490 billion cubic feet.
- Alberta’s production is roughly equivalent to Gulf coast onshore production.
