Market participants’ long and short positions in European gas futures diverge further

Dutch TTF natural gas futures saw combined long and short positions exceed 3 billion lots by Oct. 25, driven by increased activity from investment funds amid shifting market dynamics and geopolitical tensions.

Total long and short positions held for Dutch TTF natural gas futures rose further over the week ending Oct. 25 to just over 3 billion lots, the latest Commitment of Trader data from Intercontinental Exchange showed.

Commercial undertakings made up some 63.8% of this total, down slightly on the week, while the share held by investment funds saw an increase as it rose to 21.3%.

Following this, some 13% of this total figure consisted of positions held by investment firms or credit institutions, with the remainder made up of other financial institutions and operators with obligations under directive 2003/87/EC.

Though physical players retain by far the largest proportion of total futures positions in this key Eurogas market, this latest data demonstrates a shift in the net long and short positions held by these different categories of market participants.

Indeed, the net long position, now held by investment funds, strengthened by some 17% over the week ending Oct. 25, and it now sits at just under 236 million lots, according to the latest ICE data.

At the same time, the net short position held by commercial undertakings rose by 60% on the week to around 50 million lots.

The net long position for the investment funds is the highest in seven weeks and the net short position for the commercial undertakings is the highest in eight weeks.

These positioning shifts coincided with a significant uptick seen across European gas markets last week, as Platts assessed the influential Dutch TTF month-ahead contract at a near 11-month high of Eur43.47/MWh on Oct. 25.

“When I saw this price increase last week, I thought they might be behind it,” one Netherlands-based trader said. “I think funds are massively buying over the prompt three months.”

Another source suggested that this length could be positioned further out along the curve given heightened risks on the supply side over much of 2025.

“I heard that maybe speculators are long Sum-25 and can still hold their positions for a long time, hoping that utilities will need to actually buy gas to inject it at some point,” the UK-based analyst said.

“Do they know something that we don’t? Either this, or they will have to do something and close positions,” a French trader said. “With the current macro-economic position that we have now, it isn’t super sane to carry record high lengths on European energy.”

Bullish versus bearish trends

Bullishness in the market over previous weeks has primarily come on the backs of tensions in the Middle East.

Threats to energy infrastructure in Israel and Iran could also be worsened by restrictions at Strait of Hormuz, in turn affecting Qatari LNG supplies deep into the winter months.

The market is also awaiting Egypt’s impending tender to satiate its Q1 2025 demand, which could further increase competition.
Nevertheless, in the very prompt the market is rather bearish. There is a lull in demand due to mild weather and healthy gas inventories. Moreover, robust renewables in Europe has also diminished gas dependency.

“The demand is low in Europe because of mild weather,” said an Atlantic-based LNG trader. “The only potential for it to change is if we have a cold wave. Renewables are healthy and are increasingly displacing gas demand. We are in October end and November beginning now, which can also be considered shoulder months.”

The trader added that on the LNG front, there are plenty of slots available, along with cheap shipping, which is aiding the structural bearishness.

Indeed, both European gas and LNG prices have eased slightly over this week, with the TTF month-ahead last assessed by Platts at Eur42.54/MWh on Oct. 29.

Platts assessed DES Northwest Europe marker for December delivery at $13.324/MMBtu Oct. 29, marking a discount of 25 cents/MMBtu versus December TTF hub futures price.
Source: Platts