Hedge Funds Wager on U.S. Gasoline Gains as Exports Rise: Energy

Surging demand for U.S. gasoline from Latin America and Africa, coupled with refinery maintenance, is spurring speculators to bet that prices will keep rising after reaching a nine-month high.

Money managers boosted net-long positions by 3.8 percent in the week ended April 22 to the highest level in more than a year, the U.S. Commodity Futures Trading Commission said. Long positions reached a 14-month high.

Exports of U.S. gasoline were 35 percent above the five-year average in 2013 and are forecast to climb further in 2014 as refinery outages and rising consumption boosts shipments to Brazil, Colombia and Nigeria. Unplanned repairs at U.S. plants threaten to lower production already reduced by seasonal work.

Refiners are having a hard time keeping pace with the overall demand, both domestically and internationally, Tom Finlon, director of Energy Analytics Group Ltd, said from Jupiter, Florida, on April 23.

Gasoline for May delivery climbed 5.31 cents, or 1.7 percent, to $3.0952 a gallon on the New York Mercantile Exchange during the report period, the highest level since July 19. Futures dropped 1.1 percent to settle at $3.0403 today and are up 9.1 percent this year.

The U.S. Gulf Coast, home to more than half of U.S. refining capacity, shipped an average of 368,000 barrels a day of finished motor gasoline in 2013, compared with 262,200 in the previous five years, according to U.S. Energy Information Administration data.

Shipments to Colombia are set to climb as Ecopetrol SA, the state-owned oil company, carries out work at its Cartagena and Barrancabermeja refineries, according to the Paris-based International Energy Agency. The country imported about 170,000 barrels of oil products a day in January, almost all from the U.S., the IEA said in a report April 11.

Oil demand in Brazil reached a four-month high of 3.2 million barrels a day in February and is expected to expand 2.9 percent this year, according to the IEA. Deliveries to Nigeria more than doubled in 2013 from a year earlier. The countrys economy is forecast to increase by 7.1 percent this year, according to the International Monetary Fund.

Were basically supplying the world, Greg Sharenow, executive vice president at Pacific Investment Management Co., said from Newport Beach, California, on April 25. Its another source in the demand picture and helps gasoline balances stay tighter in the U.S.

Gasoline consumption in the U.S. averaged 8.69 million barrels a day in the four weeks ended April 18 and will reach 8.94 million in the second quarter, EIA data showed. Demand usually peaks between the Memorial Day weekend in late May and Labor Day in early September as motorists take summer vacations.

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Hedge Funds Wager on U.S. Gasoline Gains as Exports Rise: Energy