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Hedge Funds’ Net Bullish Positions in US Natural Gas

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Hedge funds 

Hedge funds decreased their net bullish positions in US natural gas futures and options 1.1% to 190,432 on June 5–12. However, the long positions increased 132% or by 108,314 contracts from a year ago. The US CFTC released the data on June 15.

July US natural gas futures rose 1.9% to $3.02 per MMBtu (million British thermal units) on June 15. The First Trust Natural Gas ETF (FCG) aims to track the performance of an index of companies mainly involved in natural gas exploration and production. FCG fell 2.7% to $22.1 on June 15.

QEP Resources (QEP), Continental Resources (CLR), SM Energy (SM), and Newfield Exploration (NFX) account for ~18% of FCG’s holdings. These stocks fell 5.5%, 5.4%, 4.9%, and 4.5%, respectively, on June 15. These stocks had the biggest percentage losses in FCG’s holdings on the same day.

Hedge funds’ record high 

Hedge funds’ net long positions in US natural gas futures and options hit a record high of 245,640 for the week ending May 16, 2017. Since then, the positions have declined 23%.

US natural gas prices hit $3.02 per MMBtu on June 15—the highest settlement since January 30. Lower natural gas inventories for this time of the year, warmer-than-usual weather, and strong demand have supported natural gas prices.

However, natural gas prices have declined ~17% since January 29. Near-record natural gas production and mild weather have weighed on natural gas prices. 

Open interest 

US natural gas futures contracts’ open interest decreased 4.7% to 1,513,849 on June 5–12. However, the open interest also increased 1.8% from a year ago. The open interest hit a record high of 1,627,850 for the week ending April 23, 2013.

Natural gas inventories data 

The U.S. Energy Information Administration is scheduled to release its weekly US natural gas inventory data on June 21. A Reuters survey estimates that US natural gas inventories could have increased by 82 Bcf (billion cubic feet) last week.

Read Crude Oil Futures Might Extend the Recent Rally and How an Export Boost Could Affect US Natural Gas Prices for crude oil and natural gas updates.

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