Natural Gas Futures (NYME) - COT Report for week ending February 20, 2026

Executive summary

Speculative sentiment in Natural Gas turned decisively bearish this week, aligning with a sharp price decline below the $3.00 level. Managed Money aggressively added to their short positions, flipping from a modest to a more significant net short stance. In stark contrast, Commercial participants (Producers/Merchants) continued to increase their net long position, reaching the highest level in the provided data series, indicating they view current prices as attractive for hedging future production. This growing divergence between speculators and commercials sets up a classic conflict in the market. Overall open interest saw a slight decline, suggesting the price move was accompanied by some liquidation alongside fresh directional bets.

Positioning

• Managed Money (Funds): Flipped to a more significant net short position of -26,765 contracts, a sharp turnaround from a nearly flat position (-47 contracts) just two weeks prior. This is still well below the extreme net short position of -105,134 contracts seen on January 16.
• Producer/Merchant (Commercials): Increased their net long position to +35,694 contracts. This marks their largest net long exposure in the recent reporting period, extending a trend of buying into price weakness throughout February.
• Swap Dealers: Maintained a substantial net long position of +139,104 contracts, up from the prior week and acting as a primary counterparty to other market participants.

Flows and week-over-week changes

The most significant flow this week was the aggressively bearish turn from Managed Money.

• Managed Money: Their net position fell by 18,577 contracts. This was driven almost entirely by a large increase in new short positions (+18,109 contracts), while longs were trimmed by a negligible 468 contracts. This indicates strong bearish conviction rather than simple long liquidation.
• Producer/Merchant: Their net position rose by 8,078 contracts. This was a combination of adding new longs (+7,217 contracts) and covering a small number of shorts (-861 contracts), signaling a clear bullish bias at these price levels.
• Swap Dealers: Increased their net long position by 7,278 contracts, primarily by adding 7,846 new long contracts against a small addition of 568 short contracts.

Commercials vs speculators

A classic divergence is evident and widening: - Speculators (Managed Money) are selling into the price decline, re-establishing a bearish view after covering shorts during the late-January price rally. Their addition of fresh shorts suggests they anticipate further downside momentum. - Commercials (Producers/Merchants) are acting as buyers of last resort, viewing the sell-off as a value opportunity to hedge. Their net long position at +35,694 contracts is a strong signal of physical market support. This dynamic pits momentum-driven funds against value-oriented commercial hedgers. The resolution will likely depend on near-term fundamental catalysts.

Open interest and participation

• Open Interest: Total open interest declined slightly by 9,852 contracts to a total of 1,613,556. The price drop occurring alongside a small OI decrease suggests a mix of position liquidation and the establishment of new, aggressive short positions.
• Trader Participation: The total number of reportable traders was 322, up from 295 the week prior, indicating increased engagement during the volatile week.
• Concentration: The largest four traders hold 25.4% of gross short positions, while the largest eight hold 37.9%. This concentration is notable but not at a level that would suggest a disorderly unwind is imminent.

Price context

The positioning changes in this report correlate directly with market price action. - During the reporting week (from the close of Feb 13 to Feb 20), the front-month contract fell sharply from $3.223 to $2.970, a decrease of 7.8%. - The addition of over 18,000 new short contracts by Managed Money was a key driver and beneficiary of this price decline. - This follows a period where prices rallied from a low of $2.689 on January 16 to a peak of $3.906 on January 30. Funds were caught with a massive short position during that rally and were forced to cover. Their current re-shorting indicates a belief that the rally was temporary.

Risks and watchpoints

• Divergence Risk: The starkly opposing views of Commercials (max long) and Managed Money (growing short) creates tension. A surprise bullish catalyst (e.g., weather forecast shift, supply disruption) could trigger a sharp short-covering rally as funds are forced to exit their newly established positions.
• Commercial Support Floor: The historically large net long from Producers suggests a strong base of physical buying interest resides at or below the $3.00 level. This may provide a floor for prices and limit the potential for a sustained breakdown.
• Momentum vs. Value: The immediate path of least resistance appears lower, following speculative momentum. However, if prices fail to break down further, the large commercial long position could become a powerful springboard for a price recovery. Watch for signs of Managed Money short-covering in subsequent reports as a potential indicator of a bottoming process.