Bloomberg News reports that hedge funds raised bullish bets on gasoline to more than a three-month high, helping push prices at the pump to record levels for the U.S. Labor Day holiday, as Hurricane Isaac roared toward the Gulf of Mexico and a deadly blast closed Venezuela’s largest refinery. Money managers increased net-long positions, or wagers on rising prices, by 3% in the seven days ended Aug. 28, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Aug. 31. They were the highest since the week ended May 1. Gasoline futures have advanced 22% from a 2012 low in June as stockpiles dropped and refineries closed. Futures reached a four-month high last week as Isaac closed 13% of fuel-making capacity on the Gulf Coast and a gas explosion at Venezuela’s Amuay plant shut production, threatening to revive the debate about energy costs as Barack Obama seeks re-election. Crude oil, buoyed by Middle East tension and the prospect of fiscal stimulus, also boosted the motor fuel.
Ben Bernanke also gave the markets a big bad bounce but news from China may slow things down. The closely-followed report by bank HSBC, released Monday, said export orders for China's factories slid at the sharpest rate since March, 2009. And on Saturday, the Chinese government's official manufacturing index fell to 49.2 from 50.1 in July. Any reading below 50 indicates that factory activity is shrinking rather than growing. A loyal energy report reader wrote that his in-law just returned from China and noted some big changes from just one year ago. He saw many factories closed and goods piling up. He said that fits with what we're reading. Of course the question is whether China will join other major world economies and take further actions to stimulate economic growth. Dow Jones reported that an editorial at the People's Daily, the Chinese Communist Party's flagship newspaper, on Monday called for authorities to build up an inventory of policy measures that could be used to rekindle growth but said officials should first address long standing ills such as economic imbalances and industrial overcapacity.
Right now oil gas and heating oil are on another breakout run. Unless we see some news to stop it, it looks like smooth sailing to the upside!