Gas Bears Write Off Winter Too Soon as U.S. Cold Sparks Rally

  • Money managers boost net-short position most since September
  • Futures capped biggest one-day gain in four weeks on Jan. 29

Bearish U.S. natural gas traders didn’t count on wintry weather hanging around this long.

Hedge funds boosted their net-short position 32 percent in the week ended Jan. 26, the most in 18 weeks, just before prices capped the biggest one-day gain since December. Long wagers climbed 3.1 percent, while bearish bets rose 5.2 percent, according to U.S. Commodity Futures Trading Commission data.

Gas has surged 36 percent from a 16-year intraday low in December as a cold spell boosts fuel demand, depleting stockpiles. Still, supplies from shale wells have left inventories at a seasonal record, stoking concern that the rally will lose steam as spring approaches.

“Prices have room to move higher,” said Santiago Diaz, an energy trading associate at FCStone Latin America LLC in Miami. “The weather looks like it’s going to be colder. We’re probably going to see some pretty big withdrawals from storage over the next couple of weeks.”

Gas futures rose 8.9 cents, or 4.3 percent, to $2.18 per million British thermal units on the New York Mercantile Exchange in the period covered by the CFTC report. Prices jumped 5.3 percent on Friday, the biggest one-day gain in four weeks.

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