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Are Hedge Funds Reducing Bullish Bets on US Natural Gas?

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Nov. 20 2020, Updated 4:28 p.m. ET

Hedge funds  

Hedge funds cut their net long positions in US natural gas futures and options 44.8% to 24,984 on July 17–24. The positions have also fallen ~66% YoY (year-over-year). The reduction could suggest that hedge funds are turning less bullish or more bearish on US natural gas prices. The US CFTC released the latest positions data on July 27.

September US natural gas futures (UNG) rose 0.7% to $2.78 MMBtu (million British thermal units) on July 27. 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 3.2% to $22.85 on July 27. EQT (EQT), Cabot Oil & Gas (COG), and Gulfport Energy (GPOR) fell 8.3%, 7.7%, and 6%, respectively, on July 27.

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Hedge funds’ record high position

Hedge funds’ net bullish 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 fallen ~90%. US natural gas futures declined 13% from May 16, 2017, to July 27, 2018.

Open interest  

US natural gas futures contracts’ open interest increased 0.9% to 1,547,560 on July 17–24. The open interest has increased ~16% YoY. US natural gas futures contracts’ open interest reached a record high of 1,627,850 for the week ending April 23, 2013. Since then, they have fallen 5%.

Read Crude Oil: Tracking Crucial Drivers for the latest updates on crude oil.

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