(Bloomberg) — Funds cut speculative long bets that European gas prices will rise at the fastest pace since last winter, signaling growing conviction that supply worries are set to ease as traders ramp up stockpiling ahead of the heating season.
In the past five weeks, the net-long position in benchmark Dutch gas futures held by investment funds has slumped more than 50%, according to data from Intercontinental Exchange Inc. That’s the biggest decline for a similar period starting in the middle of February. It’s also the longest stretch of weekly losses since the summer of 2023, the data released on Wednesday show.
The slump in wagers indicates a change in sentiment that the region will have enough fuel to navigate the coldest months as traders accelerate injections. Incremental progress in US President Donald Trump’s latest diplomatic efforts to end Russia’s war in Ukraine has raised expectations that additional Russian energy may return to global markets, decreasing competition for supplies.
The plunge in net-long positions also coincides with futures dropping to their lowest level in year late last week. Still, European gas prices remain above the range they typically traded in before the energy crisis that began more than three years ago when Russia invaded Ukraine.
It’s also a reversal from the start of the stockpiling season, when supply worries mounted after the region’s vast storage facilities erupted depleted from winter. Geopolitical concerns, from the war in the Middle East to intensification of Russia’s attacks in Ukraine, also contributed to the elevated bullish positions.
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