Hedge funds build biggest bearish US natural gas bet in six years
Hedge funds have accumulated their largest net short position in US natural gas futures in more than six years, amid expectations that a mild winter will weaken heating demand and exacerbate surplus supplies, according to John Kemp, citing CFTC. As of 20 October, speculative investors held a net short position equivalent to 1,833 billion cubic feet across NYMEX and ICE Henry Hub contracts,…
Hedge funds have amassed their most substantial bearish stance on US natural gas futures in over six years, as they anticipate a milder winter will reduce heating demand and worsen oversupply, according to John Kemp, referencing the CFTC. As of October 20th, speculative investors held a net short position of 1,833 billion cubic feet on NYMEX and ICE Henry Hub contracts, positioning themselves in the third percentile of weekly observations since 2010.
This marks a significant shift from the previous year, when money managers held a net long position of 2,026 billion cubic feet, ranking in the 74th percentile of historical data. The change is driven by the belief that robust El Niño conditions will dampen US heating demand during the winter, putting additional strain on natural gas prices.
Traders expect that reduced prices may be necessary to handle excess supply, encouraging greater usage among power plants. The World Meteorological Organization has warned that tropical Pacific sea surface temperatures could surge by up to 3.8°C above average between November and January, potentially amplifying the impact of El Niño on winter weather trends.
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