Investment into energy related products has been one of the fastest growing market segments. Of these products, crude oil and natural gas futures are the most popular and convenient way to invest into this fast growing market. In addition, companies with energy product exposure use crude oil futures to hedge their positions and price risk.

HY Investment offers products on the most recognized and liquid energy products on the New York Mercantile Exchange (NYMEX). This provides our clients with the credible benchmark pricing and total transparency.

Crude Oil

The world of energy trading is an exciting one. On a single trading day, a barrel of oil sometimes moves US$8 in times of political changes, or natural occurrences such as hurricanes.

References to the oil price are usually pays r reference to the spot price of either WTI/Light Crude as traded on New York Mercantile Exchange (NYMEX) for delivery in Cushing, Oklahoma; or the price of Brent as traded on the Intercontinental Exchange (ICE) for delivery at Sullom Voe. The price of a barrel of oil is highly dependent on both its grade and location. The vast majority of oil will not be traded on an exchange but on an over-the-counter basis, typically with reference to a marker crude oil grade that is typically quoted via the pricing agency Platts. For example in Europe a particular grade of oil, say Fulmar might be sold at a price of "Brent plus US$0.25/barrel".or as an intra-company transaction. IPE claim that 65% of traded oil is priced off their Brent benchmarks. Other important benchmarks include Dubai, Tapis, and the OPEC basket. The Energy Information Administration (EIA) uses the Imported Refiner Acquisition Cost, the weighted average cost of all oil imported into the US as their "world oil price".

Natural Gas

Natural gas accounts for almost a quarter of United States energy consumption, and the NYMEX Division natural gas futures contract is widely used as a national benchmark price, as well as the Intercontinental Commodities Exchange (ICE). For the Nymex, the price is based on delivery at the Henry Hub in Louisiana, the nexus of 16 intra- and interstate natural gas pipeline systems that draw supplies from the region's prolific gas deposits. The pipelines serve markets throughout the U.S. East Coast, the Gulf Coast, the Midwest, and up to the Canadian border.

The spread between natural gas futures and electricity futures - the spark spread - can be used to manage price risk in the power markets.

Because of the volatility of natural gas prices, a vigorous basis market has developed in the pricing relationships between Henry Hub and other important natural gas market centers in the continental United States and Canada.