(Bloomberg) -- Investment funds stepped up bets that European natural gas prices have room to rise, signaling continued concerns about supply.
The funds’ net-long position in benchmark Dutch gas futures rose nearly 17% last week, according to data published by the Intercontinental Exchange Inc. on Wednesday. While the prospect of easing hostilities in the Middle East has soothed some concerns, the move shows bullish sentiment remains near the highest since 2021.
Europe looks well supplied for now with its gas-storage sites nearly full and demand subdued by unseasonably mild weather. But the global gas market remains tight, which makes Europe vulnerable to major supply disruptions. Earlier this week, the benchmark contract hit the highest level this year, and traders are already pricing in risks for 2025.
Yet, there are also bearish risks, if the market gets more Russian gas than expected, Goldman Sachs Group Inc. warned in a note this week. Much depends on whether Europe will continue to get gas crossing Ukraine after its five-year transit deal with Russia expires at the end of 2024.
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