Sharp Reversal: Natural-Gas Investors Are on Edge

In early December, short bets on natural gas by money managers, hedge funds and other speculative investors outnumbered long ones—indicating investors were expecting natural-gas prices to drop further. Investors wagered on a natural-gas rally last year but it never came. Instead, prices plunged 21% for the worst year since 2014. Heading into 2017, some investors thought natural gas could extend the gains from 2016, betting that new gas-fired power plants and record exports would burn off the excess supplies that fracking had unleashed. But gas prices ended the year at $2.953 a million British thermal units, compared with $3.724 at the end of 2016. Temperate weather was partly to blame: Last winter was mild for a second year in a row—cutting into demand for home heating fuel—and temperatures didn’t rise high enough in the summer to spur high levels of air conditioning use. Adding to challenges was an onslaught […]

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