JPMorgan jumps into surging gas market

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Stark reversal of bank’s earlier decision to reduce its activity in the sector

An aerial view of a pier for a planned floating liquefied natural gas terminal in the harbour in Wilhelmshaven, Germany. File photo: REUTERS/STEPHANE NITSCHKE

Other numbers also show how its presence has grown. According to natural gas marketing firm Vennsmith Carbon’s market intelligence platform, the bank had 672.9-billion Btu a day of US pipeline space contracted either directly or on for others at the start of the first quarter, a stone’s throw from the volume it had under contract halfway through 2014, just before it sold a large chunk of its commodities business to trading house Mercuria Energy Group. JPMorgan declined to comment.

They’ve been drawn to gas’s high volatility and its growing appeal during the energy transition. For any remaining doubters, a freak Texas snowstorm in February 2021 that reaped gas traders and other sellers an $11bn windfall as prices spiked showed that there’s still big money to be made in the sector. Commodities as an asset class gained even more attention due to Russia’s invasion of Ukraine as prices of key materials surged to multiyear highs.

To be fair, not all of the banks participating in physical gas trading exited in the first place; some have been ramping up for years. JPMorgan never fully stepped away and continued to do some small-scale transactions and hedging for clients even after selling parts of the business, a person familiar with its strategy said.

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JPMorgan jumps into surging gas marketStark reversal of bank’s earlier decision to reduce its activity in the sector
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