West Texas Intermediate (WTI) Crude and Natural Gas futures on NSE

The NSE and the BSE had been allowed to deal in commodity derivatives but the progress has been fairly slow since. Now, the NSE has decided to go aggressive by introducing commodity futures on WTI Crude Oil and on Natural Gas (Henry Hub). WTI Crude has to be understand in contrast to the Brent Crude, which is the benchmark for North Sea Crude. The WTI crude is the benchmark for oil coming from the US and Canada and is short for the West Texas Intermediates. Generally, the price of WTI crude tends to be lower than the price of Brent Crude. Let us look at this launch in greater detail.

Launch of WTI Crude Oil futures on NSE

The launch of the commodity futures on WTI Crude would be effective from 15th May 2023 and these will be monthly crude contracts benchmarked to the price of WTI crude. Here are some of the highlights of the WTI Crude oil contracts on NSE.

• Trading on the WTI crude oil futures will be available on all trading days Monday to Friday from 9.00 am to midnight.
   

• The minimum trading unit for WTI Crude futures will be 100 barrels and the price will be denominated in rupees per barrel. The maximum order size will be restricted to an order of 10,000 barrels at the maximum.
   

• The position in WTI Futures will be subject to margins as under. It will be subject to base margining system based on volatility category or on SPAN, whichever is higher. In addition, there will also be an extreme loss margin (ELM) of 1% of contract value. The exchange may impose additional or special margins from time to time.
   

• The quality specifications of the contract would he light sweet crude oil with sulphur content of 0.42% by weight or less. In addition, the API gravity will have to be between 37 degrees and 42 degrees.
   

• In terms of settlement of contracts, the final settlement will be done in Indian rupees of the NYMEX (New York Mercantile Exchange) front month contract on the last trading day. The last available RBI USDINR reference will be used for conversion. All WTI contracts will be mandatorily settled in cash and there will be no physical delivery.
   

• On 15th May 2023, the exchange will launch WTI Crude contracts for the expiries of June 2023, July 2023, August 2023, September 2023, and October 2023. In addition, the November 2023 contract will be introduced on 22nd May 2023 and the December contract will be introduced on 19th June 2023.

The first trades on WTI crude futures will be available from 15th May 2023 onwards.

Launch of Natural Gas (Henry Hub) futures on NSE

The launch of the commodity futures on Natural Gas (Henry Hub) would be effective from 15th May 2023 and these will be monthly crude contracts benchmarked to the price of Natural Gas (Henry Hub) on the NYMEX (New York Mercantile Exchange). Here are some of the highlights of the Natural Gas (Henry Hub) contracts on NSE.

• Trading on the Natural Gas (Henry Hub) futures will be available on all trading days Monday to Friday from 9.00 am to midnight.
   

• The minimum trading unit for Natural Gas (Henry Hub) futures will be 1250 MMBTU (metric million British Thermal Unit) and the price will be denominated in rupees per MMBTU. The maximum order size will be restricted to an order of 60,000 MMBTU at the maximum.
   

• The position in Natural Gas (Henry Hub) Futures will be subject to margins as under. It will be subject to base margining system based on volatility category or on SPAN, whichever is higher. In addition, there will also be an extreme loss margin (ELM) of 1% of contract value. The exchange may impose additional or special margins from time to time.
   

• The quality specifications of the contract would be as under. It must conform to Natural Gas meeting the specifications set forth in the FERC approved tariff of Sabine Pipe Line Company.
   

• In terms of settlement of contracts, the final settlement will be done in Indian rupees of the NYMEX (New York Mercantile Exchange) front month contract on the last trading day. The last available RBI USDINR reference will be used for conversion. All WTI contracts will be mandatorily settled in cash and there will be no physical delivery.
   

• On 15th May 2023, the exchange will launch Natural Gas (Henry Hub) futures contracts for the expiries of June 2023 and July 2023. The August 2023 contract will be launched on 26th May 2023. Subsequently, they will keep adding one monthly contract for each month.

The first trades on Natural Gas (Henry Hub) futures will be available from 15th May 2023 onwards.