Analyzing Hedge Funds’ Positions in US Natural Gas



Hedge funds 

Hedge funds reduced their net bullish positions in US natural gas futures and options 11.3% to 165,768 on June 19–26. However, the net long positions have increased ~416% and ~104% in the last six months and the past year, respectively. The US CFTC released the latest positions data on June 29.

August US natural gas futures fell 0.5% to $2.92 per MMBtu (million British thermal units) on June 29. 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 rose 0.3% to $23.36 on June 29. The United States Natural Gas ETF (UNG) fell ~1% during the same period. UNG seeks to track active natural gas futures.

Gulfport Energy (GPOR), Chesapeake Energy (CHK), and Cabot Oil & Gas (COG) rose 1.5%, 1.2%, and 0.6%, on June 29.

Article continues below advertisement

Hedge funds’ record high position

Hedge funds’ net long positions in US natural gas futures and options reached a record high of 245,640 for the week ending May 16, 2017. Since then, the positions have declined ~32.5%. US natural gas futures have increased 3.7% from May 16, 2017, to June 29, 2018.

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

However, natural gas prices have declined ~20.2% since January 29. Record natural gas production and mild weather have weighed on natural gas prices. 

Open interest 

US natural gas futures contracts’ open interest decreased 4.4% to 1,470,651 on June 19–26. The open interest decreased 3% in the last six months and 8.8% from a year ago. US natural gas futures contracts’ 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 July 6. A Reuters survey estimates that US natural gas inventories could have increased by 73 billion cubic feet last week.

Read WTI Crude Oil Futures Hit a Multiyear High: Are the Bulls Back? for the latest updates on crude oil.


More From Market Realist