By MOMING ZHOU
breakdowns from Kansas to
Texas are giving gasoline a boost, spurring speculators to
increase bullish bets for the first time in six weeks as the
Labor Day holiday approaches.
Hedge funds raised net-long positions by 13% in the week
ended Aug. 12, Commodity Futures Trading Commission data
show. The wagers slumped 56% in the previous five weeks,
while gasoline futures dropped 10% since the Memorial Day
holiday on May 26, the traditional start of the driving
Bets on rising prices reached this years high in late
April on speculation that peak summer demand would reduce
supply. Inventories expanded to a four-month high in July, as
refineries produced a record amount of fuel and consumption
was stuck at the lowest seasonal level since 2012. The
outages are unlikely to stem a decline in prices, according
outages spurred some
buying, said John Kilduff, a partner at Again Capital,
a New York-based hedge fund that focuses on energy,
Its certainly still a bearish market. The demand
is not great, and
there is plenty of gasoline coming into the market. We remain
Gasoline futures gained 1.9 cents, or 0.7%, to $2.7345/gal on
the New York Mercantile Exchange in the period covered by the
CFTC report. Prices fell to $2.6666 on Aug. 14, the lowest
since Feb. 5, and dropped 1% to $2.6714 at 8:33 a.m. in
Regular gasoline at the pump, averaged nationwide, sank to
$3.454/gal on Sunday, the lowest level since Feb. 28,
according to Heathrow, Florida-based AAA, the largest US
motoring group. The peak driving season typically runs
through Labor Day, which falls on Sept. 1 this year.
Refineries are making more than enough gasoline to meet
domestic demand, which has helped push gas prices to the
lowest level for this time of year since 2010, said
Michael Green, a Washington-based AAA spokesman. It
seems unlikely that an increase in road trips over Labor Day
weekend would reverse this summers gas price decline
based on current conditions.
A fluid catalytic cracker at ExxonMobils 344,600-bpd
refinery in Beaumont, Texas, was shut after a malfunction
July 25. CVR Energy closed the 115,000-bpd Coffeyville
refinery in Kansas after a July 29 fire.
US refineries operated at 91.6% of capacity in the week ended
Aug. 8, down from 93.8% in July, according to the Energy
Information Administration. Gasoline production was 9.52
million bpd, the most for this time of year since since EIA
began weekly data in 1982.
Demand averaged 9.02 million bpd in the four weeks ended Aug.
8, the lowest seasonal level since 2012, according to the
EIA, the Energy Departments statistical arm.
Inventories rose to 218.2 million bbl as of July 25, the most
Stocks are ample, output is rising and demand will see
structural decline for years. analysts at Bank of
America including Francisco Blanch, the banks head of
commodities research in New York, said in a report.
capacity rose to a record
94.9 million bpd by the end of 2013, according to BPs
Statistical Review of World Energy. US capacity reached a
record 17.9 million this year, according to the EIA.
Too many refiners and too little demand, and
thats the problem, said Robert Campbell, the New
York-based head of oil products research at Energy Aspects, a
London-based research firm. Refining
continues to grow rapidly relative to demand.
Hedge funds and other money managers boosted net-long
positions in gasoline by 3,752 futures and options to 32,916
in the week ended Aug. 12, the CFTC said Aug. 15 in its
weekly Commitments of Traders report. Thats the biggest
increase since June. Long positions grew by 2,233 to 60,972,
while shorts slipped by 1,519 to 28,056.
In other markets, bearish wagers on ultra low sulfur diesel
shrank by 30% to 13,103 contracts. The fuel dropped 0.19 cent
to $2.845/gal in the report week.
Net longs on US natural gas decreased 14% to 131,124 futures
equivalents. 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 Futures US Henry Hub contract.
Nymex natural gas rose 7.7 cents to $3.974/MMBtu during the
Net-long positions in benchmark West Texas Intermediate fell
by 7.4% to 218,814 futures and options, the lowest since June
2013. WTI dropped 1 cent to $97.37/bbl in the report week.
Crude jumped 1.9% on Aug. 15 after Ukraine said its forces
attacked and partially destroyed a convoy entering the
country from Russia. Prices retreated as much as 0.8% in
Monday's electronic trading to $96.58.
Its a fundamentally bearish market, subject to
all the geopolitical uncertainties that we have no control
over, said James Williams, an economist at WTRG
Economics, an energy-research firm in London, Arkansas.
Refiners have been running at a pretty high rate, and
demand has been weak. We are probably in for more continued