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- Hedge funds and portfolio managers are reducing their short positions on European diesel futures.
- Rising natural gas prices and colder weather are boosting demand for diesel and gasoil.
- Traders are becoming more bullish on diesel futures due to these factors.
Hedge funds and other portfolio managers have been slashing their bearish bets on the European ICE gasoil futures amid falling temperatures and rising natural gas prices in Europe.
In the week to November 26, money managers reduced – once again – their short positions on the gasoil futures traded on the ICE, according to data from the exchange quoted by Bloomberg.
In ICE gasoil futures, speculators raised their net long position, or the bullish bets, by 3,421 lots to 23,239 lots as of November 26, the weekly report from the exchange showed.
Similar reports from the U.S. CFTC covering the commitment of traders in the week to November 26 are being delayed because of the Thanksgiving holiday and are slated for release later on Monday.
Per ICE data, last week’s decline in shorts on European diesel marked the fourth consecutive week in which traders cut their bearish bets. The four-week run of speculators reducing their short positions was the longest such streak since February this year, according to Bloomberg.
Colder weather with now mostly winter temperatures, as well as rallying natural gas prices, have boosted gasoil and diesel prices in Europe in recent weeks, with expectations of further rises through the winter months.
The rise in natural gas prices could also incentivize some gas-to-oil switching, so gasoil futures were also pushed up and traders’ sentiment has become more bullish over the past few weeks.
Dutch TTF Natural Gas Futures, the benchmark for Europe’s gas trading, jumped last month to a 2024 high and continued to rise on the first day of December, as EU natural gas stocks have been depleting in recent weeks at the fastest pace since 2016.
As of 1:25 p.m. Amsterdam time on Monday, the front-month TTF futures prices were up by 1.6% on the day, at $51.07 (48.59 euros) per megawatt-hour (MWh)—a 2024 high, due to the fast-depleting storage and supply concerns in view of the end of the transit deal for Russian gas via Ukraine on December 31.
By Charles Kennedy for Oilprice.com
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The post Traders Become More Bullish on European Diesel as Winter Arrives appeared first on Energy News Beat.
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