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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.

Onyx Markets NGL Natural Gas Perpetual (1000MMBtu) N. America – Perpetual Commodity CFD

Natural Gas Perpetual (1000MMBtu) N. America – Perpetual Commodity CFD

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Name & Trade Code

Contract Name Natural Gas Perpetual (1000MMBtu)
MT5 Code Natural_Gas
Contract Classification Perpetual Commodity CFD
Geographical Region N. America

Contract Specification

Sector Energy
Product Group NGL
Tenor Period Perpetual: Blend/Basket of next two available tenors
Maximum Forward Tenor Perpetual: Blend/Basket of next two available tenors
Contract Size 1000
Contract Unit
Trading Price Quote $/MMBtu
Price Digits 4
Currency USD
Tick Value 0.1
Tick Size 0.0001
Minimum Volume 0.1
Volume Steps [Lots] 0.1
Settlement Perpetual: Priced from IG comprising a blend of the live price of the front 2 months futures contracts, with the weighting adjusting as it moves along the forward curve.
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Expiry Trading Overview

Contract Expiry Date The last trading day of the expiring Tenor Period (i.e. 31 March 2025 for Mar 25 Tenor Period)
Last Trading Day (for new open positions) Five working days prior to the Contract Expiry Date for the Tenor Period (i.e. 24 March 2025 for Mar 25 Tenor Period)
Last Trading Day (for closing position in that Tenor Period) The Contract Expiry Date of the relevant Tenor Period

Tenor Period Settlement Valuation Process

Open Volume The net open volume for the expiring Tenor Period
Daily Settlement Value Market-on-Close – The daily settlement assessment time, e.g. 4:30 pm for European contracts
Daily Settlement Volume Each day during Tenor Period, the remaining Open Volume reduces by the equivalent of 1/ (number of pricing days in the Tenor Period, including today if prior to Market-on-Close) and be settled at Daily Settlement Value
Final Settlement Price Perpetual: Priced from IG comprising a blend of the live price of the front 2 months futures contracts, with the weighting adjusting as it moves along the forward curve.
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How Perpetual Nat Gas Contract for Difference (“CFD”) Work

  • Continuous Trading: Unlike futures contracts, Perpetual Nat Gas CFDs don’t have an expiration date. This allows traders to hold positions for as long as they want without worrying about contract rollovers.
  • Price Tracking: The CFD price closely mirrors the price of the underlying Nat Gas futures contract, typically the front-month contract.
  • Leverage: CFDs are leveraged products, allowing traders to control larger positions with a smaller initial investment.
  • Cash Settlement: Trades are settled in cash, eliminating the need for physical delivery of Nat Gas.

 Differences from Futures Contracts

  • No Expiration: Futures contracts have set expiration dates, while Perpetual CFDs can be held indefinitely.
  • Contract Size: CFDs often have smaller contract sizes, making them more accessible to retail traders.
  • Exchange vs. OTC: Futures are exchange-traded, while CFDs are typically over-the-counter products.
  • Regulatory Oversight: Futures markets are more heavily regulated compared to CFD markets.

Appeal to Speculators

  • Simplicity: Perpetual SBs eliminate the need for contract rollovers, making them easier to manage for long-term positions.
  • Accessibility: Lower margin requirements and smaller contract sizes make SBs more accessible to retail traders.
  • Flexibility: Traders can easily go long or short without restrictions.
  • No Physical Delivery: There’s no risk of having to take delivery of Nat Gas, which is appealing to pure speculators.

CFD Swap Rate Adjustments

While Perpetual SBs offer simplicity, they come with daily holding costs known as “swap rates” or “overnight funding adjustments.” These adjustments reflect:

  • Futures Curve Movement: The basis between the front and next month futures contracts.
  • Admin Fee: A charge applied by the broker.

The formula for commodities overnight funding adjustment is:

  • Adjustment = nights held x (trade size x (basis +/- admin fee))

Where the basis is calculated as:

  • Basis = (P3 – P2) / (T2 – T1)
  • P2 = price of front future
  • P3 = price of next future
  • T1 = expiry date of the previous front future
  • T2 = expiry date of the front future

This adjustment can be positive or negative, depending on the market structure (contango or backwardation) and the direction of your trade (long or short).

Conclusion

Perpetual CFDs offer a simplified approach to oil trading, appealing to speculators with their ease of use and accessibility. However, traders must be aware of the daily holding costs and understand how these can impact their overall profitability, especially for longer-term positions.