Hedge funds reduced bullish bets on gasoline (NYMEX:RGH14) by the most since June as stockpiles surged to an 11-month high before a cold blast that probably will curb demand in the U.S. Midwest and Northeast.
Money managers cut net-long positions, or wagers on rising prices by 22% in the week ended Jan. 14 to the lowest level since Nov. 19, U.S. Commodity Futures Trading Commission data show. Short positions more than doubled.
Gasoline tumbled to a two-month low last week after a government report showed supplies climbed to 233.1 million barrels, the highest since Feb. 8. Demand fell to the least in a year, pushing pump prices to a three-week low. Temperatures from the Midwest to New England are forecast to average below normal from Jan. 22 to Jan. 26, diminishing fuel use as drivers avoid icy and wet road conditions.
“Everything out there right now is bearish for gasoline,” Tom Finlon, director of Energy Analytics Group Ltd., said by phone from Jupiter, Florida, on Jan. 17. “Inventories built significantly across the nation last week and it’s January, the time when we traditionally see very low demand. We have more winter weather coming that may slow consumption further.”
Futures slipped 5.62 cents, or 2.1%, to $2.6224 a gallon on the New York Mercantile Exchange in the report week. The fuel rose 0.56 cent to $2.626 at 10:09 a.m. in electronic trading after settling at $2.6204 on Jan. 17. Gasoline is the third worst performer this year in the Standard and Poor’s GSCI Index of 24 commodities, down 5.8%.
The fuel retreated 3.13 cents to $2.5951 a gallon on Jan. 16, the lowest settlement since Nov. 12, amid less driving demand and cold-weather forecasts. Nationwide consumption of gasoline fell 3.1% to 8.02 million barrels a day in the week ended Jan. 10, the lowest since Jan, 4, 2013, according to the U.S. Energy Information Administration.
Temperatures in New York, the delivery point for Nymex futures, may reach a low of 11 degrees Fahrenheit (minus 12 Celsius) by Jan. 22, with Boston dropping into the single digits and Philadelphia and Washington hovering in the teens, according to MDA Weather Services in Gaithersburg, Maryland. Chicago may touch minus 4 and Atlanta will be in the 20s.
Regular gasoline, averaged nationwide, fell 0.3 cent to $3.284 a gallon yesterday, the ninth consecutive decline and lowest level since Dec. 26, according to data from Heathrow, Florida-based AAA, the nation’s largest motoring group.