Demand has been tepid so far during this summer’s driving season, and hedge funds’ bearish bets on gasoline prices have increased to their highest level in seven years.
Fund managers’ short gasoline positions increased by 5,093 lots to 36,729 lots in the week ended July 2, according to data from the Commodity Futures Trading Commission. This is the highest level since July 2017.
Fuel consumption has been sluggish during the North American summer driving season. According to a June 26 report from the Energy Information Administration, gasoline inventories increased by the largest amount since January. Four-week fuel demand fell for the first time in two months.
Data for the July 4 holiday has not yet been released. AAA predicts that approximately 71 million Americans will travel on Independence Day.
Despite weak fuel forecasts, crude oil prices rose in the week to July 2, hitting a two-month high on the risk of Hurricane Berrier and rising tensions in the Middle East and Europe. Fund managers increased their net bullish position in West Texas Intermediate crude oil by 13,265 contracts to 249,081 contracts, the highest level since October.
