One Energy ETF Breaking from the Pack

While crude oil prices were stuck in the doldrums, Gasoline futures and commodity-related exchange traded fund surged ahead Thursday.

The United States Gasoline Fund (NYSEArca: UGA), which tracks gasoline futures, rose 3.8% Thursday as Nymex RBOB Gasoline futures gained 3.5% to $1.275 per gallon. Meanwhile, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, dipped 1.0% as WTI crude oil futures was down 0.9% to $36.8 per barrel. [Oil ETFs Plunge to All-Time Lows]

Fueling the advance in gasoline futures, short traders may have been caught with their pants down and scrambled to cover their positions, which further supported the gasoline market.

Traditionally, a popular seasonal trade in the oil market has been to short gasoline futures and take long diesel positions in expectations that diesel would strengthen on heating demand during winter, write David Sheppard and Anjli Raval for Financial Times.

However, as we are witnessing in the current unseasonably warm El Nino winter season, demand for diesel in the northeast region has declined. [Warm El Niño Weather Could Cool Energy ETFs This Winter]

The United States Diesel-Heating Oil Fund (NYSEArca: UHN) fell 1.3% Thursday. Nymex Heating Oil futures were hovering around $1.2398 per gallon.

On the other hand, gasoline demand has been surprisingly strong. The falling crude oil prices have also pressured gas prices at the pump, adding to greater sales for gas-guzzling SUVs and longer road trips, Bloomberg reported.

“People are taking to the roads with abandon,” John Kilduff, a partner at Again Capital LLC, told Bloomberg. “We’re also seeing a switch to larger cars, with trucks making a bigger share of new car sales.”