Hedge funds pushed their net-bullish Brent crude positions to a three-month high in the week to 1 September, but diesel bets climbed even faster as the Iran conflict threatens shipping through the Strait of Hormuz. US retail diesel prices hit a record $5.85 a gallon on Thursday, a move that carries more direct inflation risk than the crude rally itself.
Money managers lifted net-bullish Brent crude positions by 37,837 contracts to 261,435 in the week ending 1 September, the highest level in just over three months. Net-long bets on US crude rose to their highest since June.
Diesel prices hit a record
Diesel has moved even more sharply than crude oil itself, squeezed by simultaneous conflicts in the Middle East and Ukraine. Net-bullish positioning on the fuel climbed to its highest since March. US retail diesel prices hit a record $5.85 a gallon on Thursday. Diesel feeds almost every stage of the physical economy, so a sustained rally at the pump flows through to broader costs faster than a move in Brent alone, adding to inflation worries.
Gasoline joins the rally
Gasoline has moved in tandem, with net-long bets surging to 89,263 lots, the highest since December, as prices hover near record highs for early September. Traders have rarely been this bullish at this point in the year on a seasonal basis, pointing to genuine supply concern rather than routine seasonal demand.
Conflict widens beyond Iran
The fighting has widened beyond Iran and the US, with Iran firing at Jordan, Kuwait and Bahrain, while Israel has warned it would strike civilian infrastructure if Tehran attacks it. Iran has resumed targeting vessels transiting the Strait of Hormuz, interrupting a period in which shipping traffic had gradually recovered. Diesel and gasoline positioning stays at unusually stretched bullish extremes for as long as the corridor remains under threat.
Source: Investinglive
Trading involves risk.
Risk Disclaimer
