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Over the past week, portfolio managers have boosted their bullish bets on the benchmark European natural gas futures as supply concerns mounted with a potential strike at Australian LNG export facilities, adding to flow disruptions from Norway where some of the gas infrastructure is under maintenance.
The position of the fund managers in European natural gas futures turned into a net long – the difference between bullish and bearish bets – for the first time this year and for the first time since October 2022, according to Wednesday weekly data from the Intercontinental Exchange cited by Bloomberg.
Long positions increased in the past week, while shorts slumped by more than 20%, the data showed.
Investors haven’t been this bullish on Europe’s natural gas prices all year. The most recent supply threat raised volatility after a period of several months of calm trade.
The potential strike in Australia over pay and work conditions could affect a tenth of global LNG. The threat of a strike sent Europe’s prices surging in the past few days, and once again highlighted Europe's difficult energy security position. Europe’s benchmark gas prices surged by 40% last week when the workers’ union threatened to go on strike.
The front-month futures at the TTF hub, the benchmark for Europe’s gas, traded at $42.15 (38.62 euros) per megawatt-hour (MWh) as of 1:24 p.m. GMT on Wednesday, slightly down by 0.5% on the day. The price is more than $10.91 (10 euros) per MWh higher than just two weeks ago, despite the fact that the EU gas storage sites are now 90% full, reaching the EU target two and a half months ahead of the November 1 deadline.
“It is looking as though European storage will essentially be full before the start of the next heating season and so we would expect to see renewed downward pressure on prices, particularly once there is some clarity around Australia,” ING strategists Warren Patterson and Ewa Manthey said on Wednesday.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com