UNG Bears Return as Borrow Market Tightens Again

UNG has reversed course in a week — the bear retreat that defined mid-June is unwinding, with fresh short positions building and the borrow market tightening sharply just days after it had looked relaxed.

The positioning story has flipped. Short interest jumped 11.6% in a single session on June 23, landing at 6.5% of the free float — erasing much of the week's earlier decline. That one-day spike follows a week where SI had been tracking lower, so the sudden reversal stands out. More telling is what happened to availability: it dropped from 148% on June 22 to 77% by June 23. A week earlier it had recovered to comfortable levels after a brutal squeeze in early June that pushed it as low as 38%. That squeeze has now half-reversed in a single day. Cost to borrow has climbed 22% on the week to 2.49%, back toward the upper end of the recent range after touching a 30-day low of 2.04% on June 16. The lending market is becoming less accommodating again — and notably faster than it eased.

Options traders are pulling back from their recent bullish lean. The put/call ratio has edged down to 0.30, sitting nearly 1.6 standard deviations below its 20-day average of 0.32 — which sounds modestly bullish, but the 52-week range tells a more nuanced story. At 0.29, PCR is close to its lowest reading of the year. When a ratio already at the bullish extreme barely moves despite a fresh short-interest surge, it suggests options positioning hasn't yet caught up to the bearish shift in the lending market. The ORTEX short score ticked up to 56.7 on June 23 from a recent low of 54.2 — still well below the 64-65 range it held in early June, but the direction has turned.

The fund itself dropped 2.3% on June 23 to close at $11.50, giving back the week's gains after a strong month that saw UNG rise around 5%. Natural gas futures remain the key driver here, and the fund's recent recovery has attracted fresh skeptics. The institutional holder list is dominated by trading firms — Goldman Sachs, Jump Trading, Virtu, and Flow Traders are among the top holders — which points to a predominantly tactical rather than strategic ownership base. These are desks likely to move quickly when conditions shift.

The previous note from June 17 flagged a "dramatic reversal" in lending conditions as the dominant story. That reversal has now partially unwound. The question worth watching heading into next week is whether the one-day spike in short interest on June 23 is a one-off repositioning or the start of a fresh building cycle — particularly given that availability is already tightening again after just a day of net new borrowing.