A Bloomberg report said majority of the hedge funds are placing their bets on benchmark natural gas futures in the US. The report said the increase in bets on gas futures were driven by the demand of fuel as the freezing temperatures had helped jack up gas prices to a three-year high.
Barclays Plc head of global natural gas and LNG research Biliana Pehlivanova said, "Traders are reacting to the forecasts for extreme cold temperatures persisting for the rest of the month. If this weather continues, we could see prices pushing even higher."
The cold weather has dropped temperatures in some major financial hubs in the US. On January 27, Chicago could experience -12 degrees Fahrenheit or -24 Celsius, which is 30 less than the normal temperature, according to AccuWeather Inc. New York, on the other hand, will have temperatures dropping to as low as 11 degrees, which is 16 degrees below normal temperature. EIA data, on the other hand, indicate that 49% of households in the US had been using gas for mostly heating.
Based on the U.S. Commodity Futures Trading Commission data, speculators have increased their bets on escalating prices in futures on the New York Mercantile Exchange by 21% last week. This was It was also mentioned that three contracts connected to the delivery point for Nymex futures, Henry Hub, recorded its highest level observed since the past month.
CFTC report revealed that the net-long positions by fund and other money managers on the Nymex US natural gas contract went up 154,643 futures equivalents, which is a 26,571 futures equivalents increase in the week that ended 21st of January. same bets on the four gas contracts rose to 401,021 futures equivalents, which is a 16,442 futures equivalents increase. Bloomberg also noted that in the other markets, bets on crude oil by hedge funds and large speculators increased by 781 futures and options combined to 230,503.
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