Gas prices are headed lower amid weak demand, even during peak driving season, according to Wall Street’s short bets

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Hedge funds increased their bearish bets against gasoline prices to the highest in seven years after this year’s summer driving season has delivered only tepid demand so far.

Money managers’ short-only positions in gasoline rose by 5,093 lots to 36,729 lots in the week ended July 2, according to the Commodity Futures Trading Commission. That’s the highest since July 2017.

Consumption of the fuel during the North American summer driving season has been lackluster. Gasoline inventories expanded by the most since January, according to the Energy Information Administration’s June 26 report. Fuel demand on a four-week basis fell for the first time in two months over the period. 

Data for the July 4 holiday have yet to be released. The American Automobile Association predicted that about 71 million Americans would travel over Independence Day. 

Despite the sluggish forecast for fuel, crude rallied over the week ending July 2, hitting two-month highs on risks from Hurricane Beryl and rising tensions in the Middle East and Europe. Money managers increased their net bullish position on West Texas Intermediate by 13,265 lots to 249,081, the biggest since October.

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