Last Blast of Winter Gives U.S. Gas Bulls a Reason to Celebrate

(Bloomberg) -- A final icy blast of winter was welcome news for U.S. natural gas bulls.

Money managers raised their net-long position in the fuel by 7.8 percent in the seven days ended March 21 to the highest level since June 2014, just as a late-season freeze sent heating demand soaring. Bears cut short bets to a six-week low, U.S. Commodity Futures Trading Commission data show.

Winter’s last gasp proved to be a respite for gas bulls, eroding a stubborn supply glut and boosting prices after an unusually warm start to 2017 made the fuel the worst performer among major commodities. While inventories remain above normal, gas exports to Mexico and elsewhere are climbing as output from shale basins stagnates, bolstering the market.

“The market has gotten a lot of support from the cold and LNG exports, and production is still struggling,” Viraj Sawant, energy market analyst at Gelber & Associates in Houston, said by phone. “The longer-term outlook is quite bullish.”

Gas futures rose 5.3 percent to $3.093 per million British thermal units on the New York Mercantile Exchange during the CFTC reporting period, the highest close since Feb. 9. They settled at $3.076 on Friday.

The short and long positions are Bloomberg calculations based on seven U.S. natural gas contracts, including futures and options, that are traded on the New York Mercantile Exchange and Intercontinental Exchange. The calculations are based on the standard contract size of 10,000 million British thermal units with smaller contracts adjusted to that equivalent.

To contact the reporters on this story: Christine Buurma in New York at cbuurma1@bloomberg.net, Naureen S. Malik in New York at nmalik28@bloomberg.net.

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Stephen Cunningham

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