(Bloomberg) -- Hedge funds jettisoned bullish bets on U.S. natural gas after prices plunged 15 percent in a week, the steepest drop in a year.
Money managers cut their net-long position in gas contracts by 6 percent, the most since August. Long wagers slipped 5 percent in the week ended Oct. 25 while bearish bets fell 1 percent, according to U.S. Commodity Futures Trading Commission data.
Gas prices collapsed after surging to a 22-month high in October, signaling concern that another balmy winter will pare demand for the heating fuel and leave behind a stockpile glut that would weigh on the market next year. A drop in gas production from shale reservoirs may prove temporary as explorers put rigs back to work.
“We've seen an exodus of long positions from the gas market,” said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut. “The forecasts are showing above-normal temperatures for the remainder of the month and November, which means the pace of storage gains is going to accelerate.”
Gas futures slid 48.9 cents, or 15 percent, to $2.774 per million British thermal units on the New York Mercantile Exchange in the period covered by the commission's report. That's the biggest drop in a year for any CFTC report period. They settled at $3.105 on Friday, the first day of trading for the December contract.
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
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