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Hedge Funds’ Net Long Positions in US Natural Gas

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Hedge funds 

Hedge funds’ net bullish positions in US natural gas futures and options contracts dropped 25% to 88,763 on February 13–20, 2018. However, the net long positions increased by 12,948 contracts or 17% from a year ago. The net long positions fell for the third straight week, which suggests that hedge funds are turning bearish on natural gas futures.

US natural gas prices increased ~0.8% on February 13–20, 2018. The United States Natural Gas ETF (UNG) and the First Trust ISE-Revere Natural Gas ETF (FCG) increased ~0.8% and ~2.7%, respectively, during this period. These funds follow natural gas futures.

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Moving averages 

April US natural gas futures contracts were below their 100-day, 50-day, and 20-day moving averages on February 23, 2018, which suggests that US natural gas futures could trend lower. 

Key natural gas price drivers for this week

Mild weather is expected for the next two weeks, which could pressure natural gas prices. A less-than-expected withdrawal in natural gas inventories compared to the seasonal and historical average could also pressure natural gas prices. A rise in US natural gas production could pressure natural gas prices.

EIA’s forecast  

NYMEX natural gas prices averaged $2.99 in 2017. According to the EIA, US natural gas prices could average $3.2 per MMBtu in 2018 and $3.08 per MMBtu in 2019. The expectation of an increase in US natural gas demand and exports would favor natural gas prices.

Read US Crude Oil Inventories Add Bullish Momentum to Oil Futures for the latest updates on crude oil.

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