Notice #  02-68
March 5,  2002
 
To:               All  NYMEX Division Members
                    NYMEX Division Member Firms
 
From:          J. Robert Collins, Jr., President
 
 
Re:        Request for assistance in communicating the importance of the  weekly natural gas storage report to the Department of  Energy
 
 
The U.S. Department of  Energy Energy Information Administration (EIA) will take over the release of the  weekly natural gas storage report from the American Gas Association this  spring.  Since its inception in  1993, the survey has been an important source of on-going changes in the supply  and demand of natural gas, and plays an important role in the transparency of  the market.  While at the present  time the report is released during open outcry trading hours, the Exchange has  reason to believe that the EIA is leaning toward releasing the numbers in the  late afternoon or on the weekend.   Officials at the EIA have said they believe this will minimize the  volatility in the marketplace.
 
It is the firm belief of the  Exchange that releasing the weekly storage report in the off-hours will only  increase market volatility upon the resumption of open outcry trading, will  limit market transparency, and would put many market participants at a  disadvantage.  In the interests of  market transparency and fairness, the Exchange is concerned that the report be  released during open outcry trading hours when the market is most liquid, and  has suggested a time of 10:30 A.M. 
 
The Exchange has made  its position known in written comments to the Department of Energy.  EIA Administrator Mary Hutzler has said  that the Exchange appears to be the only interested party that feels strongly  about releasing the data during regular trading hours. 
 
It is important that market  participants, particularly commercial entities, contact the EIA on this  issue.  I urge you and your  customers to call Ms. Hutzler, (202) 586-6351, and cordially explain how  important it is to have the information made available during regular daytime  trading hours, preferably 10:30 A.M.  Please make the following  points:
 
?  The weekly inventory report is an  important source of information regarding changes in the supply and demand of  natural gas.  It is currently  released to coincide with regular daytime trading hours of the natural gas  futures market. 
 
?  Wide participation in the New York  Mercantile Exchange natural gas futures market by commercial buyers and sellers  from all segments of the industry has made the futures contract the North  American pricing benchmark.
 
?  The release of the report in the late in  the afternoon, or early in the morning when the trading floor is closed, will  put most market participants at a distinct disadvantage to those firms who have  trading desks manned round the clock.
 
?  The release of the information in the  off hours could also increase volatility at the opening of the market -- having  the opposite of the desired effect.
 
?  In the interests of fairness and market  transparency, it is vital that the statistics continue to be released according  to current practice, during daytime trading; one of the most active times of the  day is shortly after the market open, or about 10:30 A.M.        
 
If you prefer to fax Ms.  Hutzler at (202) 586-0329, or email mary.hutzler@eia.doe.gov, we have provided  the following recommended language:
 
 
Ms. Mary  Hutzler
Administrator  
Energy Information  Administration
U.S. Department of Energy  
Washington, DC  
 
Dear Ms.  Hutzler:
 
Since its inception in 1993,  the American Gas Association's weekly inventory survey has been an important  source of on-going changes in the supply and demand of natural gas, and has  fulfilled an important role in assuring the transparency of the market.  We understand that the reporting  function will be assumed by the Energy Information Administration this spring,  and wish to urge that in the interest of market fairness and efficiency that the  weekly report continue to be released during regular daytime trading hours of  the natural gas futures market.
 
Wide participation in the  New York Mercantile Exchange natural gas futures market by commercial buyers and  sellers of gas from all segments of the industry has made the futures contract  the North American pricing benchmark for this important energy resource.  For this reason, we feel that it is  vital that the statistics continue to be released according to current practice,  during regular daytime trading hours, the most active trading period.  Typically, one of the most active times  of the day would be shortly after the market opens, about 10:30 A.M.  
 
A release of the inventory  figures in the late afternoon or on the weekend would primarily benefit the  major companies that can afford to man round-the-clock trading desks because  they will be able to react immediately, while smaller firms will have to wait  until the market opens on the following business day.  It has been our experience that the  release of market-moving news in the off-hours often increases market volatility  at the market open.
 
We urge you to maintain the  current practice of releasing this information during daytime  trading.
 
Thank you for your  consideration.
 
                                                                                        Sincerely,