Hedge Funds Set Record Short Position on US Natural Gas as Warm Winter Forecasts Weigh on Prices

Hedge funds amassed the largest-ever short position on US natural gas this week, betting that an unusually warm winter will curb demand for heating and power-plant fuel. Money managers increased short-only exposure across seven benchmark Henry Hub contracts to 625,150, according to Commodity Futures Trading Commission data released Friday — the highest in records dating to May 2013 and surpassing a record set just a week earlier. The net-short position rose to 223,591, the most bearish overall stance since February 2020, when Covid-19 crushed fuel demand. The all-time net-short peak was 266,416, also set in February 2020. December front-month gas futures have tumbled 18% to $2.898 per million British thermal units over the past three weeks as forecasts shifted warmer. Commodity Weather Group expects above-normal temperatures across the northern US for the first two weeks of November. The bearish bets reflect growing conviction that a Super El Niño pattern will bring mild weather, but they also raise the risk of a short squeeze should a severe cold snap hit.