Cold Weather has Hedge Funds Hot for Gas

With the Northeast and Midwest, as well as parts of the west, experiencing below average temperatures, hedge funds are raising their bets on natural gas. Net-long positions on natural gas were up 27.5% for the week ending January 15 according to the CFTC. Gas prices are up 17% since January 2nd and weather forecasts are predicting below normal temperatures for the last week of January.

Natural gas prices slid 1.5 percent in New York on Jan. 8 on speculation that mild weather would curtail heating demand, leaving stockpiles near a seasonal record. The futures then fell to a 15-week low on Jan. 9 as forecasts turned warmer for the eastern and central U.S. through Jan. 18.

U.S gas production in 2013 will average an all- time high of 69.84 billion cubic feet a day, up 0.4 percent from 69.59 billion estimated in December, the Energy Information Administration said Jan. 8 in its monthly Short-Term Energy Outlook. Supplies may climb 0.9 percent from last year, according to the EIA, an arm of the Energy Department.

Source: Financial Post