Speculators boosted bets that gasoline prices will rise on prospects for the most Independence Day traffic in seven years and fighting in the Middle East.
Money managers increased net-long positions by 7.6 percent in the week ended June 24, U.S. Commodity Futures Trading Commission data show. Long positions advanced 5.5 percent and shorts fell 0.3 percent.
Americans traveling by car over the July 4th weekend will pay the most for fuel since 2008, AAA said last week. Pump prices are at the highest level for the period in six years, data from the motoring organization show. Gasoline advanced with crude this month after insurgents captured the northern Iraqi city of Mosul and advanced toward Baghdad.
“The gasoline market is relatively strong,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone on June 27. “There’s anticipation of strong demand over the July 4 weekend and during July and August as a whole.”
Gasoline gained 1.1 percent to $3.1258 a gallon on the New York Mercantile Exchange in the period covered by the CFTC report and is up 11 percent for the year, the best performing energy future in the S&P GSCI Commodity Index. It fell 2.18 cents, or 0.7 percent, to settle at $3.077 today after advancing 0.4 percent to $3.0988 on June 27.
Regular gasoline at the pump, averaged nationwide, rose to $3.684 a gallon June 25, the highest since April 30, according to Heathrow, Florida-based AAA, the largest U.S. motoring group. It slipped 0.2 cent to $3.676 a gallon yesterday.
About 34.8 million people plan to drive 50 miles or more from home during the five days ending July 6, up from 34.1 million last year and the most since 2007. U.S. motor-fuel demand peaks in the vacation season that stretches from Memorial Day in late May to Labor Day in early September.
Gasoline demand over the four weeks ended June 29 averaged 8.95 million barrels a day, 1.7 percent more than a year earlier, according to the Energy Information Administration. Consumption peaked at 9.64 million barrels a day in July 2007, monthly data shows. Consumption tumbled during the recession that started in December 2007, the worst slump since the Great Depression.
“Gasoline demand is growing again,” Evans said. “We’ve not quickly reverted to our pre-recession behavior. The increased fuel efficiency standards and higher mileage mean that we may never reach those levels.”
Gasoline futures reached an 11-month high on June 23 as the fighters of the Islamic State in Iraq and the Levant, known as ISIL, moved closer to Baghdad. Prices retreated after Iraqi Oil Minister Abdul Kareem al-Luaibi said output wasn’t affected by the fighting and the country planned to increase crude exports next month from about 2.5 million barrels a day in June.
Hedge funds and other money managers increased net-long positions in gasoline by 4,678 futures and options to 66,588, the highest since the week ended May 6, the CFTC said. Long positions rose by 4,601 to 88,962.
“There’s speculation that there will be a significant upswing in gasoline prices,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone on June 27. “We should see greater demand over the July 4 holiday.”
In other markets, net-long positions in benchmark West Texas Intermediate fell by 3.1 percent to 345,283. Net longs slipped by 11,053 to 345,283 futures and options. Long positions fell 3 percent, while shorts declined 0.6 percent. WTI dropped 0.3 percent to $106.03 in the report week.
Bullish wagers on ultra low sulfur diesel climbed 49 percent to 40,381 contracts, the highest level since March. The fuel rose 0.8 percent to $3.0416 a gallon in the week.
Net longs on U.S. natural gas fell 4.7 percent to 300,193, the least since December. The measure includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry Hub Swap Futures, Nymex ClearPort Henry Hub Penultimate Swaps and the ICE Future. Nymex natural gas dropped 3.7 percent to $4.535 per million British thermal units during the report week.
Gasoline inventories rose 710,000 barrels to 215 million in the week ended June 20, the fourth straight gain, EIA data show. Supplies of crude oil and distillate fuel, a category that includes heating oil and diesel, also climbed, according to the Energy Department’s statistical arm.
“The gasoline show is mostly over,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone on June 27. “Once we get into late July, attention shifts unless a hurricane disrupts output. Supplies are rising and we should see imports arrive from Europe.”