Natural gas exchange traded funds are losing heat, with gas speculators the least bullish on the commodity this year, as the quicker-than-expected increase in production bolsters inventories.

The United States Natural Gas Fund (NYSEArca: UNG) has declined 5.1% and iPath Dow Jones-UBS Natural Gas Total Return Sub-Index ETN (NYSEArca: GAZ) fell 8.3% over the past month. Nevertheless, UNG is still up 21.8% and GAZ is 19.1% higher year-to-date. [Natural Gas: Finally a Winning Bet]

NYMEX natural gas futures now trades around $4.58 per million British thermal units

Money managers reduced net-long positions for a fifth straight week to the lowest level since December after the Energy Information Administration revealed increased inventory levels, reports Christine Buurma for Bloomberg.

According the EIA, inventories increased 114 billion cubic feet, larger than the five-year average for a sixth week, to a higher-than-expected 1.38 trillion cubic feet in the week ended May 23.

“The pace of restocking picked up and traders began to have heightened expectations about the size of weekly supply increases,” Teri Viswanath, the director of commodities strategy at BNP Paribas SA, said in the article.

Meanwhile, consumers reduced gas demand by an average 5.7 billion cubic feet per day, or 8.8%, in May, according to LCI Energy Insight data.

“We’ve had a pretty mild May and that’s raised hopes that these big storage injections will continue all summer,” Phil Flynn, a senior market analyst at Price Futures Group, said in the article. “There’s growing optimism about the supply picture.”