What the forecasts say
A strengthening El Niño is setting up what is expected to be the warmest U.S. winter on record. Matt Rogers, president of the Commodity Weather Group, said October ranked third warmest since 1950 based on natural gas-weighted heating degree days, a proxy for heating demand. He added November is tracking to be the warmest on record "by a lot," and that both the core winter period of December through February and the broader November through March heating season are also likely to set new warmth records.
That early-season warmth has already trimmed heating needs, taking some pressure off inflation for consumers and officials contending with high gasoline, diesel and jet fuel prices.
How markets and producers are reacting
Traders have swung hard bearish. Money managers now hold the largest short-only position in U.S. natural gas futures on record and the biggest net-short stance since February 2020, according to the latest weekly Commodity Futures Trading Commission data.
Producers are adjusting too.
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Why Europe is different
U.S. gas prices have been insulated from overseas turmoil because limits on liquefied natural gas export capacity constrain shipments. Europe is not getting that relief.
The risk and what it could mean for your portfolio
But with a record pile of short positions, the risk of a squeeze rises.
The bottom line: watch the temperature forecasts, inventory updates, and producer curtailments if you have energy exposure.
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