Investment funds entered a net short Dutch TTF gas position on the Intercontinental Exchange (Ice) for the first time in 20 months, according to the most recent commitment of traders report.
Hedge funds held a net short position of 11TWh for the first time since March 2024 in the week ending 21 October, after increasing their short contracts to an all-time high of 463TWh.
But investment firms have also slightly increased their longs in recent weeks, increasing their aggregate TTF exposure to 915TWh.
The report does not provide data on how positions vary across contracts. The high levels of both long and short exposure could therefore derive from diverging strategies for different contracts along the curve. "The market is structurally changing its positioning style," a market participant told Argus.
Companies may also have different outlooks for this winter, with near-term risks potentially tightening Europe's gas balance later in the winter.
In addition, hedge funds could have increased their shorts in recent week to capitalise on the volatility brought about by the reported peace negotiations between Russia and Ukraine, market participants told Argus.
And they may be also waiting for higher TTF prices later this winter to exit their longs and collect higher returns than in the current low-price scenario. This has kept TTF prices mostly unchanged, despite a cold snap in Europe last week, they added.
But fundamentals have largely supported the downward pressure on the TTF front-month price, owing to ample LNG supply, largely mild weather so far this winter and a firmly shut arbitrage between the Atlantic and Pacific basins. The TTF front-month price has fallen in recent weeks and hit an 18-month low of €29.735/MWh on 24 November, following news about the peace plan drafted by the US and Ukraine.
Unlike financial market participants, companies with retail portfolios — defined as commercial undertakings on Ice — have extended their net long position in recent weeks, reaching a three-year high of 169TWh in the week ending 21 October. They did so largely by purchasing long risk reduction contracts, which moved to a net long position in the week ending 14 November for the first time since January 2024.
