Financial position holders nearly double the number of physical entities on ICE TTF, which could keep supporting price volatility

• Traders agree that financial activity exaggerates trends on European gas benchmark TTF
• The number of individual players from investment funds is nearly the double of energy companies active on ICE TTF as of 8 November
• Their activity tends to be more frequent despite lower total open positions

LONDON (ICIS)–The rising presence of investment funds relative to physical traders on the ICE TTF could exacerbate curve volatility this winter.

While it is hard to attribute market movements to these entities alone, many traders agree that financial trading tends to exaggerate trends.

What is undeniable is that their presence on the market has grown steeply since Europe lost access to its stable supply of pipeline gas from Russia and became reliant on LNG, a global commodity susceptible to global price drivers and disruptions.

ICIS has previously observed that shifts in investment funds’ net long positions have correlated with TTF curve movements since the fourth quarter of 2023, but the causation is hotly debated.

Financial players tend to have a higher risk appetite than physical ones, and are useful in providing bids and offers on far-curve contracts where there may not otherwise be any.

INDIVIDUAL POSITION HOLDERS

The Intercontinental Exchange (ICE) publishes the “number of persons holding a position in each category”in the weekly Commitment of Traders (CoT) table.

The presence of investors grew by 1.7 times from January 2023 to January 2024 based on figures from ICE CoT reports collected from the ESMA register.

Meanwhile individual energy companies’ presence (“commercial undertakings” per the CoT report) increased just 1.4 times.

More recently, the investment fund total has increased from 312 on 30 August to 365 on 8 November, while energy companies grew from 191 to 196. The ratio of funds to energy companies went from 1.6 to 1.9 over that period.

“Investment firms or credit institutions”, mostly banks, act on behalf of utilities and financial players alike, and are therefore hard to pin down. Their presence has remained relatively constant around 60-70 individuals throughout 2024.

While overall energy companies hold a much larger amount of total positions – 1,900TW compared to funds’ 606TW as of 8 November – the latter comprises nearly double the amount of individual traders.

“It depends what you do with the positions you have,” one trader explained. “If I buy 100MW Cal ’26 today and hold it for one year I don’t move the market, but if I trade 500MW front month every hour, day and week… you move the market.”

Another trader mentioned hedge funds’ contribution to the current TTF Summer ’25 premium over Winter ’25 :

“You know you’ll be full enough by winter, but you don’t know if you can get enough gas in as LNG supply is uncertain. And you know how a bullish market trades, it’s not only utilities and storage players in this market,” the trader said, adding that hedge funds can also move the market.

A third concurred, “I would say the front is pushed up by financial players.”