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Hedge funds up bearish petrol bets to highest level in seven years

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Hedge funds have significantly increased their bearish bets against petrol prices, with short wagers reaching the highest level in seven years due to unexpectedly weak demand during this summer’s driving season, according to a report by Bloomberg.

The report cites data from the Commodity Futures Trading Commission’s showing that as of the week ending 2 July, money managers’ short-only positions in petrol surged by 5,093 lots to 36,729 lots – the highest level of bearish bets since July 2017.

Fuel consumption during the North American summer driving season has been disappointingly low. The Energy Information Administration’s report from 26 June indicated that petroleum inventories grew by the most since January. Additionally, fuel demand on a four-week basis fell for the first time in two months during this period.

Data for the 4 July holiday travel period has yet to be released with the American Automobile Association projecting that approximately 71 million Americans would travel around Independence Day.

Despite the lacklustre fuel demand, crude oil prices rallied in the week ending 2 July, reaching two-month highs, with the increase driven by risks associated with Hurricane Beryl and rising geopolitical tensions in the Middle East and Europe. Money managers increased their net bullish positions on West Texas Intermediate crude by 13,265 lots to 249,081, the highest since October.

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