Excess supply pressure in the U.S. natural gas market intensifies, hedge funds collectively bet on price decline for the first time in two years.

Due to ample domestic natural gas supply in the United States and a decrease in export demand, hedge funds have turned bearish on the US natural gas market for the first time since 2024, indicating growing concerns among investors about the future of energy prices. According to data released by the US Commodity Futures Trading Commission (CFTC), in the week ending May 26, fund managers' net positions on seven US benchmark Henry Hub natural gas contracts shifted from a net long position of 15,270 contracts the previous week to a net short position of 11,316 contracts. This is the first time since 2024 that hedge funds have collectively bet on a decline in US natural gas prices. The data shows that short positions increased by 19,639 contracts that week, reaching 437,598 contracts, the highest level in over two years, reflecting significantly increased market pessimism. Since the beginning of the year, the price of the US benchmark Henry Hub natural gas has fallen by about 10%. Market analysis suggests that the mild climate leading to weak heating and electricity demand is one of the key factors suppressing natural gas prices. At the same time, strong US natural gas production has led to inventory levels higher than historical averages. Compared to the overall upward trend in the global energy market, the US natural gas market has shown a clear "disconnect" this year. Influenced by the situation in Iran, international crude oil and other energy prices have risen across the board, but domestic natural gas supply in the United States has continued to flood the market. Industry insiders point out that with the rise in international oil prices, shale oil producers in Texas have increased crude oil production, and since natural gas is a byproduct of oil extraction, its production has also increased accordingly. This further exacerbates the supply pressure in the US natural gas market. Especially in the West Texas region of the United States, due to severe oversupply, local natural gas prices even fell into negative territory at one point, indicating that storage and transportation capacity has reached its limit. However, the price of US natural gas has recently experienced a temporary rebound. The latest US government inventory report shows that last week, domestic natural gas inventories increased less than market expectations, forcing some hedge funds that had previously shorted heavily to cover their short positions, thus pushing prices up rapidly. As a result, the US natural gas futures prices for delivery in July rose by about 10% that week, marking one of the largest weekly increases in recent times. Market observers believe that although short-covering has driven prices up in the short term, in the medium to long term, the US natural gas market still faces multiple pressures such as oversupply, slowing export demand, and uncertain weather factors, and prices are likely to continue to remain highly volatile.