Hedge Funds Boost Bearish Bets on Gasoline Prices
Hedge Fund Activity
Hedge funds have increased their bearish bets on gasoline prices to the highest level in seven years. This comes as the summer driving season has seen only lukewarm demand so far.
According to the Commodity Futures Trading Commission, money managers’ short-only positions in gasoline rose by 5,093 lots to 36,729 lots in the week ending July 2. This is the highest since July 2017.
Lackluster Demand
Gasoline consumption during the North American summer driving season has been disappointing. Gasoline inventories have expanded by the most since January, and fuel demand on a four-week basis fell for the first time in two months over the same period.
Holiday Travel Forecasts
Data for the July 4 holiday has yet to be released, but the American Automobile Association (AAA) predicted that around 71 million Americans would travel over Independence Day. This could potentially boost demand for gasoline.
Crude Oil Rally
Despite the sluggish forecast for fuel, crude oil rallied over the week ending July 2, hitting two-month highs on risks from Hurricane Beryl and rising tensions in the Middle East and Europe. Hedge funds increased their net bullish position on West Texas Intermediate by 13,265 lots to 249,081, the biggest since October.
Key Points
- Hedge funds increased bearish bets on gasoline prices to the highest level in seven years.
- Gasoline demand has been lackluster during the summer driving season.
- Gasoline inventories expanded by the most since January.
- Fuel demand on a four-week basis fell for the first time in two months.
- Crude oil rallied on risks from Hurricane Beryl and rising tensions in the Middle East and Europe.
Conclusion
Hedge funds’ bearish bets on gasoline prices have reached the highest level in seven years, driven by lackluster demand during the summer driving season. While holiday travel forecasts suggest a potential boost for gasoline demand, the current market trends indicate a decrease in prices. It will be interesting to see how the market responds to the release of July 4 holiday travel data and the impact on gasoline prices.
FAQs
Q: What is the current level of bearish bets on gasoline prices?
A: The level of bearish bets on gasoline prices is at the highest level in seven years, at 36,729 lots.
Q: What is driving the increase in bearish bets on gasoline prices?
A: The increase in bearish bets is driven by lackluster demand during the summer driving season, which has resulted in expanding gasoline inventories.
Q: What is the forecast for holiday travel?
A: The American Automobile Association predicts that around 71 million Americans will travel over Independence Day, which could potentially boost demand for gasoline.
Q: What is the current market trend for crude oil?
A: Crude oil has rallied over the week ending July 2, hitting two-month highs on risks from Hurricane Beryl and rising tensions in the Middle East and Europe.
Q: What is the impact of hedge fund activity on the market?
A: Hedge fund activity can influence market trends by driving prices up or down depending on their positions. In this case, their bearish bets on gasoline prices may contribute to a decrease in prices.
Author: fortune.com
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