Hedge funds bet natural gas will fall early next year

Often an arbiter of market trends, hedge funds are making bearish bets on natural gas in the new year on forecasts that higher-than-normal temperatures will drive down demand during the first few weeks of the new year.Often an arbiter of market trends, hedge funds are making bearish bets on natural gas in the new year on forecasts that higher-than-normal temperatures will drive down demand during the first few weeks of the new year.

Hedge funds and other large speculators reduced their net-long positions by 35 percent in the week ended December 21, according to the Commodity Futures Trading Commission's weekly Commitments of Traders report. That drop marked the biggest fall since October 12. With weather forecasts calling for unseasonably temperate weather, the funds are betting that demand for natural gas will ebb.Hedge funds and other large speculators reduced their net-long positions by 35 percent in the week ended December 21, according to the Commodity Futures Trading Commission's weekly Commitments of Traders report. That drop marked the biggest fall since October 12. With weather forecasts calling for unseasonably temperate weather, the funds are betting that demand for natural gas will ebb.

Dave Melita, president and chief meteorologist of Melita Weather Associates, tells Bloomberg: "The first two weeks of January, you’re going to see the market turn around from December cold. The snow cover will be melting fast. It will be 20 degrees above average on some days." Today in trading, natural gas for January delivery rose 2.5 percent, or 10.4 cents, to settle at $4.216 per million British thermal unites on the New York Mercantile Exchange.Dave Melita, president and chief meteorologist of Melita Weather Associates, tells Bloomberg: "The first two weeks of January, you’re going to see the market turn around from December cold. The snow cover will be melting fast. It will be 20 degrees above average on some days." Today in trading, natural gas for January delivery rose 2.5 percent, or 10.4 cents, to settle at $4.216 per million British thermal unites on the New York Mercantile Exchange.

Melita asserts that high temperatures will persist on the east coast and Midwest throughout January, with temperatures in February potentially reaching "blowtorch hot" conditions. Hamza Khan, an analyst at Schork Group Inc., avers that natural gas could suffer great losses early next year: "It’s a pretty bearish picture weather wise, and we’re really not seeing a decline in production." Melita asserts that high temperatures will persist on the east coast and Midwest throughout January, with temperatures in February potentially reaching "blowtorch hot" conditions. Hamza Khan, an analyst at Schork Group Inc., avers that natural gas could suffer great losses early next year: "It’s a pretty bearish picture weather wise, and we’re really not seeing a decline in production."