(Bloomberg) -- Funds are the most bullish on European natural gas since the early days of the energy crisis, signaling growing concerns about tightening supplies even as summer takes hold.

The net-long position in benchmark Dutch gas futures held by investment funds rose for a fourth straight week as of Friday, according to Intercontinental Exchange Inc. data released Wednesday. It’s now at the highest since February 2022, the month Moscow’s invasion of Ukraine roiled energy markets and sent gas prices soaring toward a record.

The bullishness dominating the market is also playing out in options, with traders snapping up contracts that would profit from a rise in prices this week. A bumper bet that sees gas prices rallying and spurring wider market swings traded on Wednesday afternoon, according to data compiled by Bloomberg.

The wagers indicate that potential supply disruptions and geopolitical risks — as well as stronger competition with Asia for liquefied natural gas cargoes — are putting traders on alert as Europe focuses on rebuilding fuel inventories for next winter. Worries also include uncertainty over remaining Russian flows through Ukraine, while a colder-than-normal winter that would spur consumption is also seen as more likely after two consecutive mild ones. 

So far, subdued industrial demand and more renewable power generation are keeping a lid on prices. But volatility has dominated trading since the continent lost most of its pipeline flows from Russia two years ago, and now relies on suppliers from across to globe to ship fuel.

Read More: European Gas Prices Fall as High Storage Stymies LNG Competition

Wednesday’s trade involved buying over 17,000 €40 call options for October, when the heating season starts in Europe, while simultaneously selling the same number of €25 puts and about half as many futures to hedge it. To a trader, it’s effectively a wager on a climb in prices this coming winter that will boost implied volatility. 

The trade is considered unusually large Europe’s options market and it comes a day after more than 100,000 calls traded on ICE, the highest since at least 2020, data compiled by Bloomberg show. In the week through Tuesday, the biggest increases in open interest have been seen in calls, especially €50 contracts for October 2025 through March 2026.

This story was produced with the assistance of Bloomberg Automation.

 

(Updates to add options wagers, context from third paragraph.)

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