(Bloomberg) -- Hedge funds are backing down from bullish bets on U.S. natural gas as prices slide amid milder weather.
Money managers cut their net-long position in gas contracts for the first time in six weeks, just before futures capped the biggest weekly decline since March. Long wagers slipped 2.5 percent in the week ended July 5 while bearish bets also fell, according to U.S. Commodity Futures Trading Commission data.
Gas has retreated from a 13-month high as forecasts show hot weather waning in parts of the U.S. over the next two weeks. Without intense heat boosting the demand for gas to fuel power plants, a stockpile glut may persist through the end of the year, keeping downward pressure on prices.
“There is still a sizable surplus of gas in inventory,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “That will result in inventories at the start of the upcoming winter heating season coming in at or near record high levels, barring a major extended heat wave over the rest of the summer.”
Gas futures dropped 15.3 cents, or 5.3 percent, to $2.764 per million British thermal units on the New York Mercantile Exchange in the period covered by the commission's report. They settled at $2.801 on Friday, falling 6.2 percent during the week.
To contact the reporter on this story: Christine Buurma in New York at cbuurma1@bloomberg.net. To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Stephen Cunningham, Christine Buurma
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