Summer Lets Down Hedge Funds That Bet Big on a U.S. Gas Rallyby
Money managers’ net-long position was biggest since Oct. 2014
U.S. natural gas futures capped biggest loss in four weeks
Hedge funds are still feeling the burn of last month’s heat wave.
They raised their net-long position in U.S. natural gas to the biggest in almost two years, counting on the blistering heat of late July to boost demand for the power-plant fuel and spark a price rally. Instead, gas futures plunged, capping the biggest loss in four weeks.
Not even the hottest summer weather in four years could lift the U.S. gas market out of a slump that had prices plunging in March to the lowest in almost two decades. A government report out Thursday showed U.S. gas stockpiles fell last week -- a rare occurrence for this time of year -- and futures still settled lower on the day. The fuel keeps flowing out of U.S. shale formations and supplies are on a track to reach a record before the winter.
That means “further losses are likely soon,” Andrew Weissman, chief executive officer of the Washington-based energy analysis company EBW AnalyticsGroup, said in a note to clients Friday.
Speculators raised their long wagers on U.S. gas in the week ended Aug. 2 while cutting their short bets, U.S. Commodity Futures Trading Commission data show. Their net-long position was the biggest since October 2014.
Gas futures meanwhile capped a 3.6 percent decline this week, settling at $2.772 per million British thermal units on Friday.