UNG enters July with short sellers pressing harder than at any point in the past month — and the borrow market confirming the conviction.
The short position has accelerated sharply. Short interest climbed 51% over the past week to reach 8.7% of the free float, the highest level since early June. That's not a gradual drift — the bulk of the move came in the final two sessions, with shares short jumping 11% on June 30 alone. The trend that the previous note flagged as reversing has now fully reversed, and then some. Bears that pulled back in mid-June are rebuilding with purpose.
The lending market tells the same story in tighter terms. Availability has dropped to 38% — meaning roughly one share remains available to borrow for every two already lent out. That's a near-halving in a single week: availability was sitting at 76% on June 26 and above 100% as recently as June 25. Cost to borrow has followed, rising 20% on the week to nearly 3.0%, back near the June 10 high of 3.09% and the highest reading since early June. The borrow squeeze that was flagged as "half-reversing" last week has now completed its round trip, and the lending pool is almost as tight as it was at the most constrained point of the recent cycle. The 52-week floor for availability was 2.4% — there is room for conditions to tighten further.
Options positioning diverges sharply from the short-side aggression. Call demand has dominated puts to an unusual degree: the put/call ratio has fallen to 0.25, nearly two standard deviations below its 20-day average of 0.30, and is brushing against its 52-week low of 0.25 set the prior session. That's almost the most call-heavy options market has been on this ticker all year. Short sellers are rebuilding positions while options traders are positioned for upside — a split that sets up an interesting internal tension.
The price action offers partial context. UNG closed at $11.72, up 2.5% on the day and nearly 2% on the week, though it remains down roughly 1.8% over the past month. Natural gas fund prices continue to face structural headwinds from contango and above-seasonal storage levels — conditions noted in recent commentary that have not meaningfully changed. The ORTEX short score has climbed to 61.1, its highest reading in the available 10-day window, up from 54.2 on June 22. That directional move in the score reflects the positioning shift, not a fundamental re-rating.
The divergence between a rapidly tightening borrow market and unusually call-heavy options flow is the number to watch heading into the week: one side will ultimately be right about where natural gas prices go from here, and the lending conditions suggest shorts are betting the recent price gains don't hold.
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