Hedge Funds Increase Positions in Fuels Amid U.S. Supply Constraints
As the war between the United States, Israel, and Iran continues into its fourth month without resolution, traders have shifted from bearish to bullish positions on fuels due to worsening supply conditions. The U.S., a major oil consumer and exporter, is experiencing tighter fuel supplies driven by high exports, reduced refinery capacity compared to 30 years ago, and the industry's cautious response to rising prices. Diesel markets in particular are under pressure, with crack spreads reaching record levels globally. Hedge funds have reversed their earlier bearish stance from spring 2026, building a net long position of 177 million barrels across key fuel contracts like gasoline and diesel as of September 1. While crude oil positions remain slightly bearish, the outlook for fuels is strongly bullish due to limited alternative supply sources amid ongoing Middle East disruptions. Diesel prices in the U.S. have surged past $5.90 per gallon, while gasoline has climbed significantly year-over-year. With refinery maintenance season approaching and fuel inventories at critical lows, especially for gasoline, market analysts expect continued volatility as demand remains strong.
Topics: diesel prices fuel shortage hedge funds oil U.S. supply squeeze