Key Takeaways
- • Speculative investors held a net short position of 1,833 billion cubic feet in US natural gas futures across NYMEX and ICE Henry Hub contracts as of 20 October, the largest bearish bet in more than six years, according to John Kemp citing CFTC data.
- • Bearish positioning sits in the third percentile of weekly observations since 2010, a sharp reversal from the same period last year, when money managers held a net long of 2,026 billion cubic feet (74th percentile).
- • Hedge funds are positioning for a mild winter driven by strong El Niño conditions, which are expected to suppress US heating demand and deepen surplus supplies.
- • The World Meteorological Organization warned tropical Pacific sea surface temperatures could rise as much as 3.8°C above average between November and January, potentially intensifying the winter weather impact.
Summary
Hedge funds have accumulated their largest net short position in US natural gas futures in more than six years, according to John Kemp, who cites Commodity Futures Trading Commission (CFTC) data. As of 20 October, speculative investors held a net short equivalent to 1,833 billion cubic feet across NYMEX and ICE Henry Hub contracts. Kemp notes that this bearish positioning ranks in the third percentile of weekly observations since 2010.
The position represents a sharp reversal from the same period last year, when money managers held a net long equivalent to 2,026 billion cubic feet, a reading in the 74th percentile of historical observations. The shift reflects expectations that strong El Niño conditions will suppress US heating demand over the winter, adding downward pressure on natural gas prices. Traders anticipate that prices may need to fall far enough to absorb excess supply by encouraging greater consumption among electricity generators.
The World Meteorological Organization has warned that tropical Pacific sea surface temperatures could rise as much as 3.8°C above average between November and January, potentially intensifying El Niño's effect on winter weather patterns. Coverage from other outlets, including Seeking Alpha, reports the same positioning and framing, citing El Niño as a threat to winter demand.
The position represents a sharp reversal from the same period last year, when money managers held a net long equivalent to 2,026 billion cubic feet, a reading in the 74th percentile of historical observations. The shift reflects expectations that strong El Niño conditions will suppress US heating demand over the winter, adding downward pressure on natural gas prices. Traders anticipate that prices may need to fall far enough to absorb excess supply by encouraging greater consumption among electricity generators.
The World Meteorological Organization has warned that tropical Pacific sea surface temperatures could rise as much as 3.8°C above average between November and January, potentially intensifying El Niño's effect on winter weather patterns. Coverage from other outlets, including Seeking Alpha, reports the same positioning and framing, citing El Niño as a threat to winter demand.
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