Natural Gas Futures - COT Report for week ending 2026-02-13

Executive summary

This week's report reveals a significant sentiment shift in the Natural Gas market, with Managed Money flipping from a nearly flat position to a net short for the first time in the recent reporting period. This bearish turn was driven by both long liquidation and fresh shorting. Concurrently, Commercials (Producers/Merchants) reduced their net long position, primarily by cutting longs. The overall market saw a substantial decline in open interest, suggesting that the recent price action was dominated by participants closing out positions rather than initiating aggressive new ones. While Commercials remain net long, providing a potential cushion, the speculative positioning has turned decisively bearish.

Positioning

• Managed Money (MM): Flipped to a net short position of -8,188 contracts. This is a stark reversal from last week's nearly neutral -47 contracts and marks the most bearish stance for this category in the provided data history. Their gross long position stands at 163,583 contracts, while gross shorts are at 171,771.
• Producer/Merchant (Commercials): Reduced their net long position to +27,616 contracts, down from +36,549 in the prior week. Despite the reduction, this is still a historically significant net long position compared to levels seen in December and early January.
• Swap Dealers: Increased their net long position to +131,826 contracts from +126,907 previously. They continue to hold a substantial net long, acting as a counterpart to other participants.

Flows and week-over-week changes

The market saw a significant reduction in overall participation, driven by both speculative and commercial players. - Managed Money: Executed a clear bearish flow, cutting 6,700 long contracts while adding 1,441 short contracts. This two-sided move was the primary driver behind their flip to a net short stance. - Producer/Merchant: Also reduced risk, liquidating a substantial 13,225 long contracts while covering 4,292 shorts. The aggressive long liquidation signals a reduced appetite for locking in current prices. - Swap Dealers: Were net buyers this week. They trimmed 1,220 longs but covered a much larger 6,139 short positions, resulting in a net position change of +4,919 contracts.

Commercials vs speculators

The classic divergence between commercials and speculators is evident, though both camps reduced bullish exposure this week. - Commercials remain the primary net long holders in the market at +27,616 contracts. Their positioning suggests that physical market participants (producers, utilities) still view current price levels as attractive for hedging purposes, although their conviction weakened this week. - Managed Money, representing trend-following funds and other speculators, is now net short (-8,188 contracts). This shift indicates that speculative sentiment has turned negative, likely influenced by the price decline from late January peaks. This is the most bearish speculative positioning seen over the past eight weeks.

Open interest and participation

• Open Interest (OI): Total OI decreased significantly by 32,575 contracts to 1,623,408. A drop in OI alongside price weakness suggests that long liquidation was the dominant market theme, as opposed to aggressive new short selling.
• Trader Counts: The total number of reportable traders fell from 308 to 295, indicating a slight decrease in overall market participation.
• Concentration: The largest four traders hold 24.1% of gross longs and 26.3% of gross shorts. The largest eight traders hold 34.4% of longs and 39.0% of shorts. The concentration on the short side remains slightly higher than the long side, a persistent theme over recent weeks.

Price context

The price series provides crucial context for these positioning shifts. The reporting period covers trading from February 10th to February 13th. - In the week leading up to this report's "as-of" date, the front-month contract experienced volatility, dropping from a high of $3.516 on February 6th before recovering to close at $3.223 on February 13th. - The broader trend since the peak of $3.906 on January 30th has been downward. The substantial long liquidation from both Managed Money and Commercials aligns perfectly with participants taking profits or cutting losing positions during this price decline. The Managed Money flip to net short is a direct reflection of this negative price momentum.

Risks and watchpoints

• Speculative Shorts: The flip by Managed Money to a net short position is a critical development. If this trend continues and new shorts are added aggressively, it could pressure prices further. However, this also introduces a risk of a short-covering rally if a bullish catalyst emerges, as this is the most bearish speculative positioning in recent memory.
• Commercial Support: While Commercials reduced their net long, it remains historically elevated. Their willingness to buy into price dips could provide a floor for the market. A continued reduction in their net long position would be a bearish signal.
• Open Interest Dynamics: Watch for the next move in open interest. If prices continue to fall while OI begins to rise, it would signal that fresh, aggressive short-selling is entering the market, which is a more bearish sign than the recent long liquidation.