Speculators Place Record Bets on Gasoline Prices Before Peak Demand Season

Hedge fund managers and other large speculators increased their bullish bets on gasoline to record highs in the week ended May 4, according to the U.S. Commodity Futures Trading Commission.

Long positions in gasoline futures and options outnumbered shorts by 70,742, up 12 percent from the previous week and the highest since at least 2006, according to the commission’s Commitments of Traders Report on May 7. Speculators also added to their long bets on crude oil.

“They’re thinking, ‘Let’s load up ahead of the summer driving season,’” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “When I combine this record long position in gasoline, and I look at the Energy Department numbers on surplus inventories, I see a lot of downside potential.”

Gasoline supplies rose 1.26 million barrels to 224.9 million in the week ended April 30, the Energy Department reported this week in Washington. Stocks were 7.6 percent higher than the five-year average. Crude oil inventories increased to the highest level since June.

Gasoline for June delivery fell 0.62 cent to $2.3222 a gallon in the week ended May 4 on the New York Mercantile Exchange. Gasoline has fallen 8.5 percent since then to $2.1251.

Oil Bets

Hedge funds, classified as managed money by the CFTC, also increased net-long oil bets just before crude began a 9.2 percent slump, according to the report. Long positions in futures and options outnumbered short positions by 159,005 contracts, up 5 percent from the week ended April 27.

“Those are the people whose hair is a little greyer and thinner than it was on Monday,” Evans said.

Oil rose 30 cents, or 0.4 percent, to $82.74 a barrel from April 27 through May 4 on the New York Mercantile Exchange. Since then, oil has fallen $7.63 to $75.11.

Speculators’ net-short positions on natural gas in Nymex futures and options jumped 43 percent to 101,021 contracts in the week ended May 4. During the period, natural gas fell 20.3 cents, or 4.8 percent, to $4.013 per million British thermal units.

Net-long positions in heating oil futures and options increased 3 percent to 36,034 contracts. Heating oil for June delivery rose 0.44 cent in the week ended May 4 to $2.2595 a gallon on the New York Mercantile Exchange.

To contact the reporter on this story: Asjylyn Loder in New York at aloder@bloomberg.net.

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