Trading and Risk

Forward Curves, Part 1: What Is a Forward Curve?

byYousuf Saghir

Storing big quantities of energy products — gas, oil or even electricity — for later consumption is expensive and a logistical nightmare. However, energy consumers and producers have a desire to lock in the price today for energy that they need to use or produce in the future.

Therefore, in energy markets, it is common to trade in so-called forwards or futures. In both cases, the delivery of the energy and the payment happens in the future while the price is set today. Depending on the actual delivery period of the energy product, the price of every forward is slightly different. In certain market scenarios, the price of the forwards that have a sooner delivery is lower than the price for the more distant forwards. But it could also be the opposite.

A forward curve is basically an array of forward prices for a certain market.

Depending on the market, forward prices can change many times per hour, so a forward curve is always a snapshot of the market prices at a certain time. As such, it is different from a price forecast.

Look out for our next blog in this series where we will discuss why companies need forward curves.

Learn more about how Enverus’ CurveBuilder can revolutionize your forward curve management today.

 

Picture of Yousuf Saghir

Yousuf Saghir

Yousuf joined Enverus in 2021 and manages a portfolio of products. He brings more than 15 years of experience in trading, risk, regulatory and settlement, in both financial services and commodity industries. Yousuf works with a cross-functional team to enhance and grow our suite of market data and curve building applications to meet the challenging needs of our customers. Yousuf is responsible for the vision, strategy and roadmap of the DataManager and CurveBuilder applications.

Subscribe to the Enverus Blog

A weekly update on the latest “no-fluff” insight and analysis of the energy industry.

Related Content

Enverus News Release - The upside of repowering wind
Power and Renewables
ByEric Yen

In the fast-paced world of energy trading, where every fluctuation in supply and demand can have significant implications, weather events wield unparalleled influence over power pricing.

Enverus Press Release - Enverus selected for NET Power’s commercial initiative
Energy Transition Intelligence
ByMatthew Keillor, Editor, Enverus Intelligence

U.S. renewables developers Arevon Energy, Longroad Energy Holdings and Broad Reach Power showed the most improvement among the top 20 wholly owned renewable energy portfolios under construction in Q1, according to an analysis using Enverus Core data presented in the...

p&r
Power and Renewables
ByAnton Vykhodtsev

Renewable energy adoption continues to rise, signaling a promising shift towards sustainable power sources. Industry challenges persist, from grid operation perspectives to new regulatory policies and supply chain constraints.

Evolve2022_0104
EVOLVE
BySusie Yuill

The Enverus EVOLVE Conference, the pivotal event for energy professionals, thought leaders and experts, to come together, trade ideas and gain new knowledge, is happening May 7 – 9 in downtown Houston at the Marriott Marquis.

risk-manager-sector
Trading and Risk
ByChris Griggs

Europe’s energy market is weathering a storm of transformations. With natural gas inventory at peak levels thanks to a diversified supply chain and falling prices, traders and analysts face an evolving challenge unlike any other.

3-deploy-wind-solar
Energy Transition
ByKevin Kang

The levelized cost of energy (LCOE) serves as a valuable measure for assessing the economic viability of a specific project or energy source.

wind-power-energy-woman-trader-stock
Energy Transition
ByCarson Kearl

Questions around the relationship of data centers to energy demand are very quickly etching themselves onto the minds of industry and technology participants alike.

Enverus Press Release - Enverus adds Energy Transition solutions around $3.5T/year sector
Power and Renewables
ByEric Palmer

Over the last seven days, the Enverus ERCOT P&R forecast has accurately predicted the 630__B constraint (KLNSW-HHSTH 138 kv with contingency DSALKLN5) in ERCOT.  While it is fundamentally driven by high wind and solar generation, there were two transmission outages...

Enverus Press Release - The surprisingly balanced global LNG market
Business Automation
ByEnverus

Being a supplier in the oil and gas business is hard. You must ride the cycle of boom and bust, differentiate yourself in an incredibly competitive market and make sure your financial fundamentals are sound.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Sign up for our Blog

Register Today

Sign Up

Power Your Insights

Connect with an Expert

Access Product Tour

Speak to an Expert