LONDON - Portfolio managers were heavy buyers of U.S. distillates last week, reflecting the continued shortage of diesel and heating oil despite signs of an economic slowdown.

Hedge funds and other money managers purchased the equivalent of 4 million barrels in the six most important petroleum futures and options contracts in the week to July 26.

Purchases of Brent (+12 million barrels) and U.S. gasoline (+1 million) were offset by sales of NYMEX and ICE WTI (-17 million) and European gas oil (-1 million).

But the most significant change was buying of U.S. diesel (+9 million barrels), which funds purchased at the fastest rate since November 2020.

It coincided with ongoing shortages of the fuel used by freight firms, manufacturers, farmers, miners and oil and gas companies themselves.

Distillate fuel oil inventories are rebuilding slowly despite the ramp up in crude processing activity during peak summer gasoline demand season.

Overall, distillate inventories have fallen since late June especially on the East Coast, which includes the delivery point for the NYMEX diesel contract in New York Harbor.

John Kemp is a Reuters market analyst. The views expressed are his own.

(Editing by David Goodman and Barbara Lewis)