RPT-COLUMN-Funds switches from gasoline to diesel as outbreak persists: Kemp



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Financial

John kemp




(Repeat story from Feb. 8. No text changes. John Kemp is a Reuters market analyst. The opinions expressed are his own)

* Card book: tmsnrt.rs/2OhSpQh

LONDON, Feb. 9 (Reuters) – Hedge funds have increased their exposure to diesel and moved away from gasoline, fearing the persistent epidemic and slow vaccination programs will depress personal travel and the service sector for many months.

Hedge funds and other fund managers bought the equivalent of 8 million barrels in the six largest oil futures and options in the week to February 2.

But the buy rate was slowest for five weeks and before the start of November, when the first successful vaccine trials were announced (tmsnrt.rs/2OhSpQh).

The portfolio managers were small buyers of Brent (+8 million barrels), NYMEX and ICE WTI (+7 million barrels), US low-sulfur diesel (+3 million) and European diesel (+ 10 millions).

However, they were big sellers of American gasoline (-19 million barrels), selling at the fastest rate since last March, when the first wave of the epidemic spread unchecked.

Until recently, fund managers were more bullish on gasoline than on any other element of the oil market.

Long gasoline fund positions outnumbered shorts with a ratio of over 9: 1 at the start of the year on expectations that a rapid vaccine rollout would lead to a recovery in personal travel and retail services.

Since then, it has become clear that immunization programs are progressing slowly in many countries, which will delay the resumption of normal travel activities.

Even after a significant proportion of the population has been vaccinated, some restrictions on movement and activity will likely be maintained for months.

The gasoline positioning ratio, which seemed the tightest at the start of the year, has since fallen to less than 6: 1.

Unlike the limited movement of people, the movement of goods has returned to pre-epidemic levels in many countries.

The result is a recovery in diesel consumption much stronger than that of gasoline, which is now reflected in a rotation of fund positions.

Associated columns:

– Oil recovery by diesel in manufacturing and freight (Reuters, February 2)

– Oil prices stall, hedge funds cautious buyers (Reuters, February 1)

– Hedge fund positions on crude and gasoline are starting to look tight (Reuters, January 18) (Editing by Mark Potter)

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