Is Oil-Indexation Still Relevant for Pricing Natural Gas?
By Adila Mchich, Director, Research and Product Development, CME Group; and Hilary Till, Solich Scholar, J.P. Morgan Center of Commodities, University of Colorado Denver Business School and Principal, Premia Research LLC
In this brief article, the authors argue that oil-indexation contracts have lost their relevance as oil and gas prices continue to decouple. In addition, the impact of the COVID-19 pandemic has provided further evidence of how this pricing framework has become ever more obsolete and an impediment to market competition and efficiency.
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