Bullish Hedge Funds Bet Big on Fuel Prices Amid US Supply Crunch
Hedge funds have shifted their stance on fuels, going from bearish to bullish as the U.S. supply squeeze deepens.
The war in the Middle East has disrupted oil flows out of Hormuz, leading to a fuel shortage and higher prices for consumers.
U.S. diesel prices have hit an all-time high of over $5.90 per gallon, while gasoline is selling for $4.1505 per gallon, up from $3.1971 per gallon a year ago.
Hedge funds have built a net long position of 177 million barrels across the most traded fuel contracts - gasoline and diesel - as of September 1, according to John Kemp's analysis.
The impossibility of replacing lost output from the Middle East and Russia with alternative supply due to lack of production capacity elsewhere is expected to keep U.S. inventories of diesel and gasoline at critically low levels.