U.S. refiners are likely to see stronger demand for middle distillates such as heating oil and diesel in 2017 after two years of declining domestic consumption. Distillate consumption is forecast to increase by 60,000 barrels per day in 2017, after falling by 120,000 bpd in 2016 and 40,000 bpd in 2015, according to the U.S. Energy Information Administration. Hedge funds have taken notice and bet on higher prices by building a net long position of 24 million barrels in heating oil futures and options on the New York Mercantile Exchange. Hedge fund managers have accumulated the largest net long position for almost 30 months, according to an analysis of data published by the U.S. Commodity Futures Trading Commission ( tmsnrt.rs/2h85LZL ). Distillate consumption is driven by a combination of heating demand (the smaller but more variable share) and freight demand (far larger and more steady) and both look positive, […]