Hedge funds continue to increase their influence on the European gas market, exacerbating volatility despite pessimistic fundamentals.
Data from the Intercontinental Exchange (ICE) shows that hedge funds’ long positions in Dutch TTF futures have reached unprecedented levels, now accounting for almost 22% of total positions, well above previous years.
This position buildup was accompanied by significant intraday volatility.
Traders observed downward pressure on prices in the morning, followed by upward moves in the afternoon, often due to algorithmic trading strategies.
These fluctuations do not always reflect fundamental market data, but are rather triggered by reactions to geopolitical risks, particularly by US hedge funds.

The role of US funds and intraday dynamics

US-based hedge funds have significant influence on the European gas market as they react more to geopolitical news than to local supply and demand dynamics.
This has led to increased volatility, with gas prices partly reacting to events that in the past would have only affected oil markets, such as maintenance shutdowns on the Norwegian Continental Shelf.
Transaction volumes on European virtual trading points increased significantly in 2024, indicating growing participation of investment funds in these markets.
According to an ACER report, traded volumes increased to 249 TWh/day in the first half of 2024, compared to 178 TWh/day in 2023.
This increase in transactions reflects the strategy of funds seeking to exploit seasonal fluctuations (summer-winter) while minimizing the risks associated with physical delivery.

Outlook 2025 and market impact

By positioning themselves heavily on contracts for the summer of 2025, hedge funds are anticipating possible tensions in gas stocks, even though the market is currently well supplied.
The absence of any major new LNG projects by that date and the uncertainty surrounding the transit agreement between Russia and Ukraine are causing these players to hedge against adverse scenarios, fueling future market volatility.
This situation, in which speculation takes precedence over fundamentals, could continue to have unpredictable effects on European gas prices, especially with winter approaching.
By maintaining their long positions, hedge funds could create more unpredictable market conditions, thereby increasing risks for other players in the sector.