Natural Gas Futures (NYMEX) - COT Report for week ending January 16, 2026

Executive summary

This report covers the week ending January 16, 2026, a period marked by a significant price decline in Natural Gas futures. Speculative sentiment, as represented by Managed Money, turned increasingly bearish, with the net short position expanding to its largest level in the four weeks of provided data. This move was validated by a sharp drop in the front-month contract price. Conversely, Commercial (Producer/Merchant) participants flipped to a slight net long position, suggesting they view current price levels as more attractive for either end-user buying or producer hedge-lifting. Open interest surged, indicating new capital entered the market, primarily on the short side, reinforcing the bearish trend for the week.

Positioning (net, extremes vs recent weeks)

• Managed Money: The key speculative group extended their bearish stance, with their net position falling to -105,134 contracts (204,133 long vs. 309,267 short). This is the largest net short position recorded in the last four weeks, deepening from -101,384 contracts the week prior.
• Producer/Merchant (Commercials): This group has shifted from a net short position in late December to a slight net long of +8,332 contracts (251,083 long vs. 242,751 short). This is their most bullish positioning in the provided data, suggesting physical market players are becoming buyers at these price levels.
• Swap Dealers: This category remains the largest net long holder, increasing their position to +164,512 contracts (201,459 long vs. 36,947 short), also a four-week high. They continue to be the primary counterparty to speculative shorts.

Flows and week-over-week changes

The reporting week saw a significant shift in positions, driven by fresh bearish bets from speculators. - Managed Money: This group showed conviction in their bearish view, adding 9,114 long contracts but adding a larger 12,864 short contracts, resulting in a net selling of 3,750 contracts. - Producer/Merchant: Commercials were net buyers, adding 3,960 long positions versus only 2,267 new shorts. This shift toward the long side is a notable divergence from the speculative flow. - Swap Dealers: Acted as a major buyer, adding a substantial 15,810 contracts to their long book while covering 1,427 short contracts. - Other Reportables: This group also expanded their net short position significantly, driven by an addition of 24,185 short contracts against only 7,893 new longs.

Commercials vs speculators

The classic divergence between commercials and speculators is highly evident and has widened this week. - Speculators (Managed Money) hold a large and growing net short position, betting on further price declines. Their gross short position (309,267 contracts) now represents 18.9% of total open interest, up from 18.6% last week. - Commercials (Producer/Merchant) are now slightly net long, indicating that producers may be lifting hedges or that large consumers are locking in prices. This positioning often acts as a potential support level for the market, as the participants closest to the physical commodity are not aggressively bearish.

Open interest and participation

• Open Interest: Total open interest saw a large increase of 39,051 contracts, rising to 1,635,220 contracts. A rise in open interest during a period of falling prices is a classic sign of a strong bearish trend, as it suggests new money is entering the market to establish new short positions.
• Participation: The total number of reportable traders increased from 316 to 331. The number of Managed Money short traders increased from 64 to 68, reflecting broader participation in the bearish trend.
• Concentration: The short side of the market shows notable concentration. The largest four traders hold 26.6% of the gross short positions, and the largest eight hold 39.2%. This concentration can be a source of volatility if these large players decide to cover their positions simultaneously.

Price context

The price series provided shows a clear correlation with the week's positioning changes. - The front-month contract price fell sharply during the reporting period, moving from a close of $3.423 on January 9 to $3.152 on January 16. - The aggressive addition of shorts by Managed Money and the corresponding surge in open interest occurred in lockstep with this price decline, indicating that speculative selling was a primary driver of the move lower.

Risks and watchpoints

• Crowded Speculative Short: The large and growing net short position held by Managed Money is a key risk. While it currently reflects the bearish trend, such a one-sided trade is vulnerable to a "short squeeze." Any unexpected bullish catalyst (e.g., weather forecast changes, supply disruption) could trigger rapid buying as these positions are covered.
• Commercial Divergence: The shift by Producer/Merchants to a net long stance is a critical watchpoint. If this net long position continues to grow in subsequent reports, it would signal that commercial players see fundamental value at these or lower prices, potentially establishing a price floor.
• Open Interest Trend: Continue to monitor open interest. If prices stabilize or rise while open interest begins to fall, it would suggest the bearish trend is losing momentum as shorts take profits and exit the market.