Gasoline inventory drops to seasonal low, hedge funds increase bullish bets!

2024-11-28 2256

Due to seasonal inventory falling below average levels in the past two months, fund managers have increased their bullish bets on US gasoline futures.

Although traders, hedge funds, and other portfolio managers have reduced their bullish bets on the US benchmark futures WTI crude oil, their bets on the rise of US gasoline futures have increased in recent reporting weeks and weeks since September.

Since 2010, gasoline inventories have dropped the fastest at this time of year, attracting management funds into NYMEX gasoline futures. Meanwhile, according to data compiled by energy analyst John Kemp from exchanges and regulatory agencies, traders remain relatively bearish on the two most traded crude oil futures.

According to the Trading Promise (COT) report compiled by Shengbao Bank, fund managers increased their net long positions in the NYMEX gasoline contract by 7319 lots (the difference between bullish and bearish bets) in the week ending November 19th.

As of the week ending November 19th, the total number of net long positions increased to 68380, with net long positions increasing by over 5000 and short positions closing by over 2000.

Calculated by barrels, this means that hedge funds and other fund managers have been net buyers of US gasoline futures for most of the time since mid September, currently holding a net long position of 68 million barrels in RBOB gasoline. According to Kemp's estimate, this is significantly higher than the net long position of only 5 million barrels held on September 10th.

Therefore, Kemp pointed out that during the ten weeks between September 10th and November 19th, traders net purchased gasoline from eight of these countries and increased their net long positions by 63 million barrels.

This is more optimistic than the recent trend of crude oil futures holdings.

As of the week ending November 19th, funds have reduced their WTI crude oil long positions due to new short selling. At the same time, driven by new long positions and short covering, traders increased their net long positions in Brent crude oil futures.

The escalation of the Russia-Ukraine conflict has boosted speculation interest in Brent crude oil. Nevertheless, traders remain bearish on the most important oil futures and contracts, except for US gasoline.

Data shows that during the period when fund managers accumulated net long positions equivalent to 68 million barrels, US gasoline inventories decreased by 13 million barrels, the largest two month decrease between mid September and mid November since 2010. During this period, the average 10-year gasoline consumption was approximately 5 million barrels.

As of early November, gasoline inventories in the United States have dropped to their lowest level in two years. Afterwards, this number slightly increased, but still remained about 4% lower than the five-year average at this time of year.

Therefore, compared to other fuel and crude oil futures, traders now hold a more optimistic view on US gasoline futures.

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