Natural Gas COT Report for the week ending 2026-03-13

Executive summary

This week's report was defined by a significant short-squeeze dynamic, as a sharp price rally coincided with a mass exodus of positions. Open interest fell by a substantial 40,951 contracts, driven by Managed Money unwinding both outright shorts and calendar spreads. Speculators (Managed Money) covered over 16,000 short contracts, reducing their net bearish stance considerably. In classic fashion, Commercials (Producers/Merchants) were on the other side, using the price strength to add over 10,000 contracts of net short hedging. The market remains net-short from a speculative standpoint, but the violent short-covering and liquidation suggest a potential shift in sentiment after a period of extreme bearishness.

Positioning

• Managed Money (Funds): The net position for this group is now -62,982 contracts (164,388 long vs. 227,370 short). This is a significant reduction in bearishness from the prior week's net short of -76,252 contracts. While still bearishly positioned, this is the least net-short they have been in three weeks. The most bearish point in the provided data was a net short of -105,134 contracts in mid-January.
• Producer/Merchant (Commercials): This group holds a slightly net long position of +8,300 contracts (278,302 long vs. 270,002 short). This is a decrease from their +18,397 net long position last week, indicating they were net sellers into the recent price rally.
• Swap Dealers: This category remains significantly net long at +155,872 contracts, although this is a reduction of over 10,000 contracts from the previous week. They continue to take the other side of producer short hedges.

Flows and week-over-week changes

The reporting week saw a major shift in positioning, primarily driven by short covering and spread unwinding. - Managed Money: The primary driver of change was a massive short-covering flow, with short positions decreasing by 16,126 contracts. Long positions also saw a slight reduction of 2,856 contracts. The net effect was buying of 13,270 contracts. - Producer/Merchant: Commercials were active net sellers. They increased long hedges by 9,507 contracts but added even more short hedges, with short positions rising by 19,604 contracts. This resulted in net selling of 10,097 contracts for the week. - Spreads: A standout feature was the liquidation in Managed Money spreading positions, which fell by a massive 38,507 contracts. This unwinding of calendar spreads was a major contributor to the overall decline in open interest.

Commercials vs speculators

The classic divergence between commercial and speculative interests was on full display this week. - Speculators (Managed Money) were forced to buy back positions, evidenced by the large reduction in their gross short exposure. This was a defensive, pain-driven move rather than a proactive shift to a bullish outlook, as gross longs also declined. - Commercials (Producers/Merchants) acted as expected, using the price rally as an opportunity to increase their short hedges against future production. Their net selling provided liquidity for the speculative short covering. This dynamic suggests that while the short-term squeeze may have pushed prices higher, the underlying commercial view is that these levels are attractive for hedging.

Open interest and participation

• Open Interest (OI): Total OI experienced a significant decline, falling by 40,951 contracts to 1,565,341. A rally that occurs on sharply falling open interest is a strong technical indicator of a short squeeze, where the buying is driven by the closing of existing short positions rather than the initiation of new long ones.
• Participation: Managed Money continues to be the largest participant via spreading, which accounts for 34.2% of total OI (535,385 contracts). However, the dramatic weekly reduction in these positions indicates a significant risk-off move or re-evaluation of forward curve dynamics.
• Concentration: The market remains fairly concentrated. The four largest traders by gross position account for 22.1% of longs and 26.3% of shorts. This is a slight decrease in concentration from the prior week.

Price context

The positioning in this report is as of the close on Tuesday, March 10, 2026. The provided price series shows that in the week leading up to this date, Natural Gas prices experienced a dramatic rally. - After closing at $2.986 on Friday, March 6, the front-month contract gapped up and spiked to a high of $3.406 on Monday, March 9. - By the time of the COT data capture on Tuesday, March 10, the price had settled at $3.094. - This sharp price increase directly corresponds with the significant Managed Money short-covering (-16,126 contracts) and the large drop in open interest, confirming that the price action was the catalyst for the positioning changes.

Risks and watchpoints

• Further Short Squeeze Potential: While over 16,000 short contracts were covered, the Managed Money category still holds a sizable net short position of -62,982 contracts. This leaves the market vulnerable to further short-covering rallies if bullish catalysts emerge.
• Producer Selling Pressure: The response from Commercials—selling heavily into the rally—suggests a price ceiling may be forming. Expect producer hedging to increase on any further moves higher, which could absorb speculative buying and cap upside.
• Spread Unwinding: The massive exit from Managed Money calendar spreads (-38,507 contracts) is a significant event. This unwinding can impact liquidity and term structure. Monitoring if this trend continues is crucial, as it signals a major reduction of capital from a key market segment.
• Lack of New Longs: The rally was fueled by short-covering, not new long initiation from funds. For a sustainable uptrend to develop, speculative traders will need to transition from simply closing bearish bets to actively establishing bullish ones. This has not yet occurred.