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UPDATE 1-Speculators cut U.S. natgas net shorts for first week in four -CFTC
February 12, 2016 / 9:02 PM / 2 years ago

UPDATE 1-Speculators cut U.S. natgas net shorts for first week in four -CFTC

(Adds gas prices)

Feb 12 (Reuters) - U.S. natural gas speculators cut their net short positions for the first week in four as the market started to focus on the upcoming summer when prices are expected to rise, shrugging off the remainder of what has been a warmer-than-normal winter.

Speculators in four major NYMEX and ICE markets decreased their bearish bets by 21,285 contracts to 24,277 in the week to Feb. 9, the U.S. Commodity Futures Trading Commission said on Friday.

That is the lowest net short position since mid-January.

Gas futures averaged $2.06 during the five trading days ended Feb. 9, compared with $2.17 during the prior week ended Feb. 2.

Looking forward, gas futures are higher, fetching $2.24 for the balance of 2016 in part on forecasts for a slightly hotter than normal summer, and $2.65 for 2017 on forecasts for demand to rise as the industrial sector uses more gas and rising exports to Mexico via pipelines and the rest of the world via liquefied natural gas terminals.

Shorts are bets that prices will fall and longs are wagers that prices will rise. The net position squares off the two.

Hedge funds have been bearish on gas since the end of 2014 as drillers, especially shale drillers, continue to pull near record amounts of the fuel out of the ground.

In November, net shorts held by hedge funds reached a five-year high of 166,165 contracts due to forecasts for light heating demand this winter due to the warming effect of the El Nino weather pattern.

The combination of high production and light heating demand has kept inventories near record highs and put pressure on prices which fell to a 16-year low in 2015. (Reporting by Scott DiSavino; Editing by Meredith Mazzilli and Chizu Nomiyama)

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