Hedge Funds Hold Their Biggest Natural Gas Short Since 2024
Key takeaways
- Henry Hub natural gas futures fell about 18% between the CFTC reports of 6 and 20 October 2026, from $3.22 to $2.64 per MMBtu.
- Managed Money (hedge funds and CTAs) took its NYMEX natural gas net short to 156,848 contracts on 20 October, the biggest since February 2024. Four weeks earlier it was 65,632.
- About 70% of that move came from funds dumping longs: long contracts fell 24% in four weeks, while shorts rose 8%.
- The COT Index is 0.7, the lowest reading of the last three years, and the z-score is -2.11. COTInsight classes it as Extreme Short.
- Fundamentals back the funds for now. US storage was 3,724 Bcf on 23 October, 38 Bcf above the five-year average, after a larger than usual 80 Bcf build.
The Short Answer
Natural gas is falling into winter because hedge funds have given up on the long side. Through September, funds held a modest net short. In October they sold out of longs and added shorts at the same time, and the net short more than doubled.
This note puts numbers on it, using the CFTC Commitments of Traders report for NYMEX Henry Hub natural gas, futures and options combined, through the report dated Tuesday 20 October 2026.
What the Natural Gas COT Report Shows This Week
Managed money positions in NYMEX natural gas:
| Report date | Funds long | Funds short | Contracts long | Contracts short | Net position | Price |
|---|---|---|---|---|---|---|
| 22 September 2026 | 71 | 56 | 266,602 | 332,234 | -65,632 | $3.20 |
| 29 September 2026 | 66 | 55 | 220,564 | 353,413 | -132,849 | $3.04 |
| 6 October 2026 | 67 | 58 | 218,792 | 363,473 | -144,681 | $3.22 |
| 13 October 2026 | 75 | 48 | 227,725 | 353,881 | -126,156 | $3.12 |
| 20 October 2026 | 68 | 59 | 203,228 | 360,076 | -156,848 | $2.64 |
Three things stand out.
The net short is the biggest in more than two and a half years. At 156,848 contracts, it is the deepest since 20 February 2024. In one week, from 13 to 20 October, it grew by 30,692 contracts, or 24%.
Funds are walking away from the long side. Long contracts fell from 266,602 to 203,228 in four weeks, a drop of 63,374, the lowest long count since June. That is about 70% of the 91,216 contract swing in the net. Short contracts rose by 27,842.
The selling came before the price fell. The biggest single jump in the short came in the week to 29 September, when shorts rose by 21,179 contracts and the price slipped only 5%. The 18% drop came two to three weeks later. Positioning moved first.
How Extreme Is the Natural Gas Short?
| Measure | 20 October 2026 | What it means |
|---|---|---|
| Net position | -156,848 | Biggest net short since February 2024 |
| Z-score (52 weeks) | -2.11 | More than two standard deviations below the one-year average |
| COT Index (3 years) | 0.7 | Bottom of the 3-year range |
| Record net short | -330,163 (11 February 2020) | Today is about half of it |
| Weeks net short in a row | 37 | Every report since 10 February 2026 |
Here the two gauges agree. On a one-year view (z-score) and a three-year view (COT Index), funds are about as short as they get. Our z-score guide and COT Index guide explain why we show both.
Natural gas is a market funds like to short. Managed money was net short in 168 of the 199 weekly reports since the start of 2023. What is unusual now is the timing: funds are pressing the short into the start of the heating season, when cold weather can change the balance quickly.
Storage Gives the Funds Their Case
| 25 September 2026 | 23 October 2026 | |
|---|---|---|
| Working gas in storage | 3,415 Bcf | 3,724 Bcf |
| Versus five-year average | +0.1% | +1.0% (+38 Bcf) |
| Versus a year earlier | -147 Bcf |
The EIA's report for the week ending 23 October showed an 80 Bcf injection, taking Lower 48 working gas to 3,724 Bcf, 38 Bcf above the five-year average of 3,686 Bcf. When we wrote about European gas storage in early October, US storage was sitting right on its average. The cushion has grown since.
A comfortable storage surplus plus mild early-season weather is exactly the setup that draws trend followers to the short side. The natural gas storage report page tracks each weekly print against the five-year band, and Energy Radar puts storage and fund positioning on the same panel so you can see when the two agree.
Right now they agree. That is what makes the short strong, and also what makes it vulnerable: the trade rests on the weather staying mild.
Why a Crowded Gas Short Matters in Winter
Natural gas is one of the most weather-sensitive markets in futures. A crowded short heading into winter is a trade with strong conviction behind it and a lot of buying to do if a cold spell arrives. With 59 funds short and a COT Index at the bottom of its range, the short side has little room left to add, and a lot of room to cover.
Our study of how long extreme positioning lasts measured 3,192 episodes across 217 markets: the median extreme lasts about three weeks, and many get more extreme before they turn. That is why we read each market on its own record. The Historical Outcome Analyzer (Ultimate) shows what Henry Hub itself did 4, 8 and 12 weeks after every past reading like this one.
What to Watch in the Next Reports
- The long count. 203,228 long contracts is the lowest since June. If funds keep cutting, the net short can deepen without any new shorts at all.
- Short-covering. A rising price with falling short contracts is the first sign of a squeeze. Watch the week after the first real cold forecast.
- Storage versus average. The surplus to the five-year average is the funds' main argument. If it shrinks on early withdrawals, the case for the short weakens.
- Europe. EU storage went into winter at the bottom of its range. Strong LNG demand from Europe is a support for US prices that the shorts are betting against.
The next COT report, with positions as of Tuesday 27 October, is released on Friday 30 October at 3:30 PM Eastern. EIA storage is published on Thursdays at 10:30 AM Eastern.
How COTInsight Tracks This Every Week
Spotting a short build like this in raw CFTC tables means tracking longs, shorts, trader counts and open interest week after week, and then lining them up against storage. COTInsight does it the moment the report lands.
- Free and Pro show natural gas net position, z-score, COT Index and regime every week. Pro adds 10 years of weekly history and CSV export, so you can put today's short next to the 2020 and 2024 lows.
- Ultimate adds trader counts and positioning structure, which is how you see funds leaving the long side, plus the full archive back to 2006, PDF reports, weekly AI commentary, VS comparison and the REST API. Ultimate members also get the weekly gas storage brief by email.
- The Historical Outcome Analyzer (Ultimate) shows natural gas's own track record after readings like this one. We tested that approach on 46 futures markets: tendencies picked on the first half of each market's history and scored only on the second half pointed the right way 56.1% of the time at 8 weeks, against a normal rate of 50.7%. The full test is in our guide to trading the COT report.
- The COTInsight TradingView indicator (Ultimate) plots the COT Index, z-score and regime right under your natural gas chart, so you see the short building next to price.
See pricing or open the dashboard. New to gas positioning? Start with our COT guide for natural gas traders.
Frequently Asked Questions
Why is natural gas falling in October 2026?
Hedge funds sold out of longs and added shorts while storage climbed above its five-year average. Managed Money cut its NYMEX natural gas longs by 24% in four weeks to 20 October and took its net short to 156,848 contracts. Henry Hub futures fell from $3.22 on 6 October to $2.64 on 20 October.
Are hedge funds short natural gas?
Yes. Managed Money was net short 156,848 NYMEX natural gas contracts on 20 October 2026, the biggest net short since February 2024, and has been net short every week since 10 February 2026.
Is natural gas crowded short?
Yes. The COT Index is 0.7, the bottom of its three-year range, and the z-score is -2.11. COTInsight classes the reading as Extreme Short.
Could natural gas see a short squeeze this winter?
A crowded short in a weather-driven market can unwind fast if a cold spell arrives, because short sellers have to buy back. The signs to watch are a rising price with falling short contracts and storage withdrawals that eat into the surplus to the five-year average.
What does the natural gas COT report show this week?
On the report for Tuesday 20 October 2026, Managed Money held 203,228 long and 360,076 short NYMEX natural gas contracts, with 68 funds long and 59 short. The next report, for 27 October, is released on Friday 30 October.
Where can I see natural gas COT data every week?
COTInsight scores natural gas positioning every Friday, with z-score, COT Index, regime, trader counts and outcome history. The natural gas market page has an overview, and the full readings are in the dashboard.
Summary
Hedge funds are as short US natural gas as they have been since early 2024. Between 22 September and 20 October 2026, Managed Money cut its longs by 24%, added 8% to its shorts and took the net short to 156,848 contracts. The COT Index of 0.7 sits at the bottom of its three-year range and storage is 38 Bcf above average, so for now positioning and fundamentals point the same way. Going into winter, that is a crowded trade with a weather risk attached.
Data: CFTC Commitments of Traders, Disaggregated report, futures and options combined, NYMEX Henry Hub natural gas, through 20 October 2026. Storage: EIA Weekly Natural Gas Storage Report, week ending 23 October 2026. Prices are front-month natural gas futures on report Tuesdays. Past results do not guarantee future results. Not investment advice.