LONDON – Bullish gasoline positions have hit their highest since the day Russia invaded Ukraine and will almost certainly rise further if record Atlantic Ocean heat draws a hurricane into the Gulf of Mexico and disrupts refineries, investors and analysts said.
Many traders have been unnerved as crude markets were whipsawed by a banking crisis in the United States and inflationary pressures. Some have found better returns in refined products.
Gasoline prices usually rise ahead of the U.S. summer driving season.
This year’s seasonal rally has been super-charged by a ten-week low in supplies caused in part by refinery outages in the US east and Gulf Coasts and strong exports to global markets from the United States, which typically imports from other countries to supplement its own production.
Already the strength of gasoline and gasoil has helped to reverse energy funds’ losses following the banking crisis stirred by the March collapse of Silicon Valley Bank, according to figures from Societe Generale and calculations by Reuters.
Money managers in the week to Aug. 1 boosted their net long holdings of NYMEX RBOB gasoline futures to the highest since late February 2022. On a seasonal basis, this position is at a three-year high, data from the Commodity Futures Trading Commission shows.
Now traders are focusing on the weather, as Atlantic waters have climbed to the highest temperatures in 120,000 years, heightening the risk of storms.
Meteorologists in July increased the number of storms forecast for this year, although they have also said the combination of rising sea temperatures and the El Nino weather pattern has increased uncertainty.
A hurricane in the Gulf of Mexico in the U.S. Gulf Coast – where nearly half of US oil refining capacity is located – could damage oil refinery units, or cause refiners to temporarily shut them down until the storm passes.
Refinery outages caused by plant shut-ins or damaged equipment in that region would likely increase fuel prices.
