NEW YORK (Reuters) - Energy hedge fund BBL Commodities expects a further rally in U.S. distillate prices, including diesel and heating oil, after successfully betting on those prices in September, it said in an investor letter.
“We continue to see upside in the distillate market,” New York-based BBL, which has about $500 million under management and is managed by former Goldman Sachs energy trader Jonathan Goldberg, said in the letter seen by Reuters on Tuesday.
However, the letter said the firm has tempered its bullishness on refining crack spreads, due to a “more favorable opinion” of the crude market. The fund makes money exploiting price differentials among energy products.
BBL gained 2 percent in September on bets that distillate cracks would rise, said a source familiar with the fund’s returns. Year-to-date, the fund is up 14 percent.
Heating oil futures , one of the main components of distillates, settled up nearly 1 percent on Tuesday at $1.5686 per gallon. It has risen 3 percent in October, extending a rally of nearly 20 percent over the past two months.
The heating oil crack spread , a measure of its profit margin over crude oil, hit a 11-month high of $16.98 per barrel in early October.
Last week, the Brent crude oil benchmark reached a one-year high above $53 a barrel.
U.S. Gulf Coast distillate stocks fell 4.5 million barrels in the first week of October, the largest drawdown since September 2005, data from the Energy Information Administration (EIA) showed.
BBL did not respond to a Reuters email seeking comment.
The hedge fund said it was also adding to its bullish wagers on U.S. gasoline after a glut in the motor fuel was partly cleared during an outage on the Colonial Pipeline that supplies about a third of the gasoline consumed on the U.S. East Coast.
Reporting By Barani Krishnan; Editing by David Gregorio