Bullish Bets Pile Up as US Fuel Shortage Hits Record Highs

Hedge funds have shifted their stance on oil and fuels, going from bearish to bullish as the U.S. supply squeeze deepens.

The war between the United States, Israel, and Iran has led to a fuel shortage in the world's largest crude oil consumer, with traders now expecting higher prices for diesel and gasoline.

U.S. inventories of diesel and gasoline are at critically low levels, making it difficult to replace lost output from the Middle East and Russia, which has resulted in record-high prices for diesel fuel.

The diesel crack spread hit record highs in both the United States and Europe in mid-August, with ING's commodity analysis team predicting that middle distillate cracks will remain highly elevated and volatile due to disruptions in Middle Eastern and Russian diesel exports.