Hedge Funds Are Bearish on Natural Gas for First Time Since 2024
(Bloomberg) -- Hedge funds turned bearish on US natural gas for the first time since 2024 on signs of plentiful domestic supplies and expectations of reduced export needs.
In the week ended May 26, money managers switched to a net-short position of 11,316, across seven US benchmark Henry Hub contracts, according to data from the Commodity Futures Trading Commission. In the prior week, investors had a net-long position of 15,270.
Short-only positions rose 19,639 lots to 437,598, the highest in more than two years, according to the data.
Prices for benchmark Henry Hub gas have dropped about 10% this year as mild weather dented demand for the heating and power-plant fuel. Robust US production has also pushed inventories above historical averages.
US natural gas has been an outlier in global energy markets this year. While the Iran war has driven up prices for other fuels and oil, America has been flooded with gas supplies. Amid higher crude prices, Texas drillers have increased their oil output, but that’s also meant more gas production as a byproduct. Supplies have been so plentiful in West Texas that local prices have been trading in negative territory.
Still, in recent days, benchmark US gas prices jumped after a government report showed domestic stockpiles last week increased by a smaller amount than analysts expected. That forced some hedge funds to unwind short positions, pushing prices higher. July gas futures climbed about 10% for the week.
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