Hedge funds are ramping up exposure to calendar spread options (CSOs) across oil and gas markets, betting on shifts in futures curves rather than outright prices – a once-niche strategy now gaining momentum among multi-strat and macro funds, according to a report by Bloomberg.
Positions in West Texas Intermediate (WTI) crude CSOs have more than tripled over the past year, while similar trades in Dutch TTF natural gas have surged, according to CME data. The trend reflects how hedge funds are reshaping the commodities landscape, pushing deeper into strategies traditionally dominated by physical traders.
The contracts allow funds to express nuanced macro views — from OPEC+ supply discipline to seasonal demand spikes in gas — while managing volatility and leverage more efficiently. Open interest in WTI CSOs has surpassed 1.5 million lots, equivalent to 1.5 billion barrels, narrowing the gap with CME’s flagship crude options.
The boom in curve trades also coincides with greater political and supply uncertainty, including renewed tensions in the Middle East and shifting US-China trade policy. Some traders are positioning for a return to contango — a market structure that signals oversupply — as global crude balances loosen into 2026.
Meanwhile, ICE Gasoil and TTF gas CSOs have also seen record participation as hedge funds hedge and speculate on diesel and LNG curve volatility, driven by sanctions on Russian fuels and a changing European storage dynamic.
