Very usefull links


News links




Dow Jones

Oil price



Views and News





Hedge funds build up long position in heating oil and diesel: Kemp




By John Kemp

Petroleumworld 01 09 2018

Hedge funds have built record bullish positions in the middle distillates used as heating oil and diesel fuel even as they become more cautious about the outlook for crude following a blistering rally.

Hedge funds and other money managers had amassed a record net long position of 92 million barrels in U.S. heating oil futures and options and 137 million barrels in European gasoil by Jan. 2.

Portfolio managers boosted their net long position in heating oil by almost 10 million barrels and their net long position in gasoil by 0.8 million tonnes or about 6 million barrels.

There were few changes in other parts of the petroleum complex, according to position data published by regulators and exchanges
( ).

Net long positions in gasoline rose by 2 million barrels to 81 million. Net longs in Brent were up by 4 million barrels to a new record of 565 million.

In contrast, net long positions in WTI fell by 6 million barrels to 455 million barrels down from a record 461 million the previous week.

Increased bullishness towards middle distillates therefore accounted for all the increase in net long positions across the six major contracts in the petroleum complex.

Growing bullishness towards mid-distillates masked a more wary approach to crude and other refined fuels in the week to Jan. 2.


Portfolio managers have solid fundamental reasons to think middle distillate prices and refining margins will increase further in 2018.

Distillate consumption, which is closely linked to industrial activity and freight movements, is growing rapidly as a result of the synchronised global economic expansion and faster growth in world trade.

At the same time, refiners are struggling to make enough to meet demand. U.S. distillate stocks fell by 24 million barrels over the course of 2017, the largest annual drawdown for at least a decade.

Exceptionally cold weather across the major population centres of the central and eastern United States since the start of the year has boosted consumption of heating oil and threatens to draw down stocks even further.

The most intense cold is concentrated in parts of the northern and northeastern United States that rely most heavily on heating oil to warm homes and offices and as an auxiliary fuel for power stations.

The winter heating season has not yet reached the half-way point in the United States and already heating demand has been much higher than in the two previous years, though still slightly below the long-term average.

Even before the recent burst of cold weather, U.S. stocks of distillate fuel oil had fallen below the 10-year seasonal average.

Distillate stocks therefore start the new year in a depleted state and likely to tighten further if industrial activity and global freight movements continue to rise.

But the concentration of positions in U.S. heating oil and European gasoil has become a significant source of downside risk if they attempt to realise some of their profits.

Funds hold 10 long positions in U.S. heating oil for every short one, the most lopsided positioning for more than seven years since November 2010.

Positioning in gasoil looks even more stretched, with the ratio of long to short positions climbing over 16:1 and closing in on the record of 19:1 set in early October.

Story by John Kemp; Editing by David Evans from Reuters. 01 08 2017

We invite all our readers to share with us
their views and comments about this article.
Write to

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to:

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels






Editor & Publisher:Elio Ohep/
Contact Email:

CopyRight © 1999-2016, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2017, Petroleumworld   / Elio Ohep - All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.