What happened
Hedge funds leaned harder into declines in natural-gas prices, pushing short-only positioning to the biggest level in records that begin in May 2013. The tally hit 625,150 across seven benchmark Henry Hub contracts, eclipsing the record set just a week earlier.
At the same time, the overall net-short position rose to 223,591. That marks the most downbeat net stance since February 2020, when the pandemic crushed fuel demand and roiled markets. For reference, the largest net short on record, set in February 2020, was 266,416.
Why traders moved this way
Prices have been sliding as the weather outlook tilts mild. December delivery futures have fallen 18 percent in the past three weeks, landing near $2.898 per million British thermal units as forecasts warmed. Commodity Weather Group now sees above-normal temperatures across the northern slice of the U.S. during the first two weeks of November, a region that drives the bulk of the nation’s heating needs.
The positioning lines up with growing confidence that a Super El Niño will deliver very gentle conditions. But it also sets the stage for a squeeze if the script flips.
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The risk and the takeaway
Those heavy shorts raise the odds of a short squeeze. A sharp, early-season blast of cold can spike consumption while curbing output, forcing traders to rush to buy back positions, which can drive prices higher. The bottom line: weather is in the driver’s seat, and positioning is piled up on one side of the boat.
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