Natural gas trading explained: Henry Hub, TTF and gas CFDs

Natural gas trading means taking a position on the price of gas, almost always through a contract linked to a benchmark: Henry Hub in the United States or the Dutch TTF in Europe. Retail traders usually do this with CFDs that track the futures market, which lets them go long or short without handling any gas. It is one of the most volatile markets on a typical CFD platform, so contract size, position sizing and gap risk need more attention than they do on most forex pairs.

This guide covers how the benchmarks work, why prices swing so much, the scheduled data that moves the market, how gas CFDs are built, and a worked position sizing example.

The two benchmarks: Henry Hub and TTF

Henry Hub (United States)

Henry Hub is a pipeline interconnection in Erath, Louisiana, and the delivery point for the main US natural gas futures contract, listed on NYMEX (part of CME Group). Key features:

• Unit: US dollars per million British thermal units (MMBtu). A quote of 3.000 means $3 per MMBtu.
• Futures contract size: 10,000 MMBtu. A move of $0.001, the minimum tick, is worth $10 per contract, and a $1 move is worth $10,000 per contract.
• Settlement: physical delivery at Henry Hub, which is why futures traders who do not want gas must close or roll before expiry.

When a CFD platform lists "Natural Gas", "NGAS" or "US Natural Gas", it is usually priced off Henry Hub futures. Check the product sheet to be sure.

Dutch TTF (Europe)

The Title Transfer Facility is a virtual trading point for gas in the Dutch network, and TTF futures (mainly on ICE Endex) have become Europe's main gas benchmark. It is quoted in euros per megawatt hour (MWh), a different unit and currency from Henry Hub.

Henry Hub and TTF prices can diverge hugely. The US produces large amounts of its own gas, while Europe imports much of what it uses, by pipeline and as liquefied natural gas (LNG). LNG shipping links the two markets, but liquefaction and export capacity are limited, so a supply shock in Europe does not pass straight through to the US price. Some providers offer a TTF CFD; many retail platforms offer only the US contract.

Why natural gas is so volatile

Gas regularly moves several percent in a day, and double-digit weekly moves are not unusual. The reasons are mostly physical.

• Storage is limited and seasonal. Gas is stored in underground facilities such as depleted fields and salt caverns. Capacity is finite, so the market cares intensely about whether stocks are high or low relative to normal for the time of year.
• Demand depends on weather. Cold winters raise heating demand; hot summers raise demand from power stations running air conditioning. Changes in weather forecasts for the next two weeks can move the price sharply, especially in winter.
• Supply is slow to respond. Production cannot be switched on overnight, so a demand surge has to be met from storage. When storage looks tight, prices have to rise far enough to reduce demand.
• LNG flows. Export terminals take large volumes of gas out of the US market. An outage at a major export plant leaves more gas at home and can push Henry Hub down; a restart does the opposite. In 2022, a fire that shut the Freeport LNG terminal in Texas for months was a widely reported example.
• Transport bottlenecks. Pipelines run at capacity in places, so regional prices can disconnect from each other.
• Thin liquidity outside main hours. Overnight and around holidays, fewer participants can mean wider spreads and jumpier prices.

The result is a market where volatility is structurally higher than in oil or gold, and where the size of daily moves can change quickly with the season.

The EIA weekly storage report

The single most important scheduled release for US gas is the US Energy Information Administration's Weekly Natural Gas Storage Report. According to the EIA, it is usually published on Thursdays at 10:30 a.m. Eastern time, with changes in holiday weeks. It reports working gas in underground storage for the week ending the previous Friday, nationally and by region.

What traders look at:

• The net change: an injection (stocks rising) or withdrawal (stocks falling), compared with analysts' expectations. A surprise in either direction often moves the price within seconds.
• The level versus last year and the five-year average: a sign of whether the market is well supplied for the season ahead.

Around the release, spreads can widen and prices can jump past pending orders. If you hold a position into it, assume the price may gap and size for that. The release time in London or central Europe shifts by an hour for a few weeks each spring and autumn, when the US and Europe change their clocks on different dates.

Seasonality

Natural gas has a clear annual rhythm in the US:

• Injection season (roughly April to October): production exceeds consumption and stocks are built up. Summer heat waves can still lift demand from power generation.
• Withdrawal season (roughly November to March): heating demand pulls gas out of storage. This is when weather forecasts matter most and prices are often most volatile.
• Shoulder months (spring and autumn): demand is lower and the market focuses on how full storage will be before winter.

Seasonality also shows up in the futures curve: winter contracts usually trade at a premium to summer ones. That matters for CFDs, because when a CFD rolls from one month to the next, the price difference between the two contracts can be large, especially around the transition into winter.

Seasonal patterns describe the physical market's calendar, not a reliable trading edge. A mild winter, a production surge or an export outage can override them in any given year.

The 2022 European gas crisis

The clearest recent example of how far gas prices can move came in Europe in 2022. As Russian pipeline deliveries to Europe were cut back during the year, buyers scrambled to fill storage before winter. TTF front-month futures, which had traded far below €50 per MWh in the years before the crisis, rose above €300 per MWh in late August 2022 according to contemporary reports. Prices then fell back sharply in the following months as storage filled and demand fell.

For a retail trader the lessons are practical: gas prices can move several-fold in months, providers may raise margin requirements or restrict products in extreme conditions, and a stop-loss does not guarantee an exit price when the market is gapping.

How natural gas CFDs work

A CFD on natural gas pays the difference between your opening and closing price multiplied by your position size. You never hold a futures contract or take delivery. The general structure is covered in CFDs on stocks, indices and commodities; here is what is specific to gas.

Contract size is broker-specific

There is no standard CFD lot size for gas. One provider may define one lot as 10,000 MMBtu to mirror the futures contract; another may use 1,000 MMBtu, or a smaller unit. The contract size determines what each price move is worth:

• If 1 lot = 10,000 MMBtu: a 0.001 move is worth $10 per lot, and a 0.100 move is worth $1,000 per lot.
• If 1 lot = 1,000 MMBtu: a 0.001 move is worth $1 per lot, and a 0.100 move is worth $100 per lot.

That is a tenfold difference for the same "1 lot". Always check the contract specification in your platform before trading, and never assume a lot means the same as it does on another broker or another instrument.

Dated or rolling contracts

Gas CFDs follow a specific futures month. Providers handle expiry in one of two ways:

• Dated CFDs with an expiry: the position closes at expiry unless you close or roll it yourself. Financing is often not charged daily, because the cost of carry is already in the futures price, but spreads may be wider.
• Rolling CFDs: the provider moves the position to the next contract automatically, usually a few days before the futures expire, and makes a cash or price adjustment to reflect the difference between the two contracts. There is usually a daily financing charge too.

Because the gas futures curve can be steep, especially between autumn and winter months, a roll can produce a noticeable jump in the displayed price. A well-designed roll adjustment means you neither gain nor lose from the price difference itself, but you may pay a spread or fee on the roll. The mechanics of contango and backwardation are explained in how commodity futures work, and the same ideas apply to oil, as covered in oil trading explained.

Leverage limits

Under ESMA's retail measures, which national regulators in the EU apply, CFDs on commodities other than gold are limited to 10:1 leverage for retail clients, meaning a 10% initial margin. Natural gas falls in that category. The details, including the 50% margin close-out rule and negative balance protection, are in the ESMA leverage limits guide. Leverage outside the EU depends on the regulator and the client's status.

Ten to one sounds modest next to the 30:1 allowed on major forex pairs, but gas can move far more in a day than EUR/USD, so the effective risk per unit of margin can be higher.

Worked example: sizing a natural gas CFD position

The figures below are illustrative. Prices, contract sizes and spreads depend on the provider and on market conditions.

Assumptions:

• Account balance: $10,000.
• Risk per trade: 1% of the balance, so $100.
• Instrument: a Henry Hub gas CFD where 1 lot = 1,000 MMBtu, minimum trade size 0.01 lots, step 0.01.
• Entry: long at 3.000 (dollars per MMBtu).
• Stop-loss: 2.850, a distance of 0.150.

Step by step:

1. Value of the stop distance per lot: 0.150 × 1,000 MMBtu = $150 per lot.
2. Raw position size: $100 ÷ $150 = 0.667 lots.
3. Round down to the platform's step: 0.66 lots. Always round down, so the amount at risk stays at or below your limit. Rounding up to 0.67 would put slightly more than 1% at risk.
4. Loss if the stop fills at its level: 0.66 × 1,000 × 0.150 = $99.
5. Value of a 0.001 move: 0.66 × 1,000 × 0.001 = $0.66.
6. Notional value: 0.66 × 1,000 × 3.000 = $1,980.
7. Margin at 10:1: $1,980 × 10% = $198.

If the provider's step size were 0.1 lots instead, the position would round down to 0.6 lots, with a loss at the stop of $90.

The instruments position size calculator runs the same arithmetic once you enter your provider's contract size, and the instruments margin calculator shows the margin. If your account is in euros or pounds, convert the dollar risk at the current rate.

What a gap does to the same trade

Suppose the price is 3.000 when an unexpected storage figure is released and the next tradable price is 2.700. A stop at 2.850 would be filled at or near 2.700, not 2.850. The loss on 0.66 lots would be 0.300 × 1,000 × 0.66 = $198, about twice the planned risk. This is the main reason gas traders often use wider stops with smaller positions, or avoid holding through the weekly storage release and weekends. More on this in gap risk and weekend risk.

The same position with a 10,000 MMBtu contract

If the provider's lot were 10,000 MMBtu, the stop distance would be worth $1,500 per lot, and the correct size for $100 of risk would be 0.0667 lots, which rounds down to 0.06 lots. If the minimum size were 0.1 lots, the smallest possible trade would risk $150, more than 1% of this account. In that case the honest answer is that the position is too large for the account, and the trade should be skipped or the stop rethought rather than the risk limit stretched.

Costs of trading gas CFDs

• Spread: gas spreads are usually wider than on major forex pairs or gold, and they widen further around the storage report, the daily open and holidays.
• Financing: on rolling CFDs, a daily charge or credit based on the notional value, as with swaps on forex positions. See swap and overnight financing.
• Roll adjustments: the spread or fee charged when a rolling CFD moves to the next contract.
• Currency conversion: if your account is not in US dollars, profits and losses on a Henry Hub CFD are converted.

Common mistakes

• Assuming a lot is a lot. Copying a position size from a forum or another broker without checking contract size can produce a position ten times larger than intended.
• Using forex-sized stops. A stop that would be sensible on EUR/USD can be hit by ordinary noise in gas. Wider stops need smaller positions.
• Holding through the storage report without meaning to. Know when it is released in your time zone and decide in advance whether to be in the market.
• Ignoring the roll. A sudden price jump on the chart at a roll date can trigger stops or confuse analysis if you do not know it is coming.
• Confusing benchmarks. Henry Hub and TTF are different markets in different currencies and units. A headline about European gas prices may say little about the US contract you are trading.
• Over-reading seasonality. Seasonal tendencies describe the physical calendar. They do not tell you what the price will do this year.
• Underestimating leverage. Even at 10:1, a fast-moving market can take a large share of an account. Most retail CFD accounts lose money, and leverage magnifies losses.

Frequently asked questions

What moves natural gas prices the most?

Weather forecasts, storage levels and supply disruptions, in roughly that order for the US market in winter. The EIA weekly storage report, production data, LNG export flows and outages at export terminals also matter. In Europe, pipeline and LNG import flows and storage levels dominate.

When is the EIA natural gas storage report released?

According to the EIA, the Weekly Natural Gas Storage Report is usually released on Thursdays at 10:30 a.m. Eastern time, with changes in some holiday weeks. Check the EIA release schedule for the current week, and convert to your time zone, because daylight saving changes do not fall on the same dates in the US and Europe.

What is the contract size of a natural gas CFD?

It depends on the provider. The NYMEX Henry Hub futures contract is 10,000 MMBtu, and some CFD providers mirror that, while others use 1,000 MMBtu or smaller units per lot. The contract specification in your trading platform is the only reliable source.

What is the difference between Henry Hub and TTF?

Henry Hub is the US benchmark, priced in dollars per MMBtu and delivered in Louisiana. TTF is the main European benchmark, priced in euros per megawatt hour at a virtual point in the Dutch gas network. Because the US is a large producer and Europe relies heavily on imports, the two prices can move very differently.

What leverage can I use on natural gas CFDs?

For retail clients in the EU, ESMA's measures cap leverage on commodities other than gold at 10:1, which includes natural gas. Other regions have their own rules, and providers can set lower limits than the maximum.

Why did my gas CFD price jump overnight with no news?

The most likely explanation is a contract roll. Rolling CFDs move from one futures month to the next, and the two contracts can be priced quite differently. Providers usually make a balancing adjustment so the roll itself does not create a gain or loss, but the chart can still show a step. Check your provider's roll calendar.