Natural Gas (NG): Traders Try to Reverse Net Position From 2.5-Year Bottom

The Commodity Futures Trading Commission (CFTC) reported, for the week ending last Tuesday, that the Commitments of Traders (COT) reports showed.

Non-commercial large speculators increased their net position to sell gas contracts by 6.7 thousand contracts, bringing the total to 57.3 thousand. This follows a reduction in net position for 4 of the last 5 weeks. The net position has been growing since May 4, 2021, when it reached its lowest level.

Operator hedgers have increased their net position to purchase gas contracts by 0.7 thousand, bringing the total to 34.2 thousand after almost 6 weeks of decline.

The open interest rose by 40,000 contracts, bringing the total to 1,182,000.

The ratio of the number of contracts to sell to the number of contracts to buy for large speculators rose by 0.05 to 1.30 over the course of the week.

Data from the Commodity Futures Trading Commission (CFTC) shows a growing bearish sentiment in the natural gas market. After a significant monthly contraction, traders began to increase their net position on rising prices. This net position has grown from levels that were minimal for almost 2.5 years, indicating a shift in sentiment. If this trend continues, it could lead to a decrease in natural gas prices.

WTI

COT reporting data is essential for medium to long term trading. Generally, large speculators, NON-COMMERCIAL (banks, investment funds) tend to follow the trend (blue line). On the other hand, small speculators, NONREPORTABLE POSITIONS, usually do not have much impact on the market (red line). Hedgers, COMMERCIAL (operators, large companies) usually trade against the trend (black line). The net position is the difference between the number of buy and sell contracts. Open interest is the total of all open positions in the market.