Natural Gas (UNG): Specs increase shorts. GOOD! Better for a squeeze….

We have been discussing the position in natural gas lately and how we are looking at this as a play on a very high short interest positioning by speculators as well as the potential for greater demand moving forward. Last week, traders once again decreased long positions/increased short exposure of the commodity. This has been a reasonable trend to follow as it often signals a reversal as traders with heavy short position are rushing to cover when the price of Nat. Gas moves higher.

Also, there is a good amount of murmurs about the additional needs of Japan and Asia since their own supply and resources are not nearly enough to keep up with demand. The news of a few LNG ships ordered today could be helping to perk up the price of (UNG) and the commodity.

(Yes! We own a position in UNG for client accounts)


According to Bloomberg/CFTC: Total net positions for natural gas were short 25,250 contracts as of Feb. 7, according to the U.S. Commodity Futures Trading Commission, compared with 40,106 short contracts last year. Speculative short positions were 2,820 contracts below the previous week and 45% lower yoy, at 101,596 contracts.