Power Trading¶
Spreads¶
Location Spread¶
Nat Gas¶
JKM-TTF
Henry Hub-TTF
Oil¶
Brent-WTI: The spread between North Sea Brent and West Texas Intermediate.
- Brent Futures (ICE: B) is the price of the North Sea Brent crude oil. Physical hub is in Sullom Voe, Scotland. Cash settled.
- WTI Futures (NYMEX: CL) is the price of the West Texas Intermediate crude oil. Physical hub is in Cushing, Oklahoma. Physical delivery.
- Spread trade
- Convergence
- Divergence
- Risk
- Expiry and Delivery: Timing mismatch
- WTI - trading terminates 3 business days before 25th calendar day of the month prior to contract month. Physical delivery between 1st and last day of contract month. e.g. For October 2026 contract (CLZ26), trading terminates 3 business days 25th September 2026, and physical delivery is between October 1-31, 2026.
- BRENT - trading terminates on last business day of the second month preceding the contract month. No physical delivery. e.g. For October 2026 contract (BZZ26), trading terminates on last business day of August 2026.
- BRENT contract expires 1 month before WTI contract. BRENT will settle at price of last business day of the second month preceding contract month (i.e. last business day of August 2026 for October 2026 contract), so then it will leave an unhedged WTI position which will settle at the next month (i.e. 3 business days before 25th September 2026 for October 2026 contract).
- Traders usually trade the BRENT + 1 - WTI spread to hedge the timing mismatch.
- Recently there was a huge divergence between WTI-Brent spread during the US-Iran war, where Brent was trading at a significant premium. US increased production of WTI, which kept WTI prices low while Brent was trading at a significant premium. People also mentioned that the Trump administration was manipulating WTI prices.
WTI Midland-WTI Houston
Time Spread¶
Spark Spread¶
Cross-Market Arbitrage¶
Cross-Commodity Arbitrage¶
Quality / Crack spreads¶
Volatlity / Options Spreads¶
Relative Value¶
TTF vs TFU - same underlying, different contract specs. TTF is in €/MWh, TFU is in $/MMBtu.