May 18 (Bloomberg) -- Lead futures outstanding, or open interest, rose to a 19-month high on the London Metal Exchange and stockpiles increased to their highest in more than seven years, potentially signaling a further slump in prices.

Open interest rose to 132,043 contracts on May 14, the most since October 2008. Market open interest, reported by LME members and compiled by the bourse, gained 32 percent this year. LME inventories reached 186,800 metric tons today, the highest since November 2002. Lead fell 24 percent this year, the second- worst performer after zinc.

Rising open interest combined with falling prices suggests short positions, or bets on lower prices, have been added, said Randy North, a trader at RBC Capital Markets in London.

Some investors are “playing lead from the short side,” he said. “When you see rising stocks it means there is less demand than supply.”

Refined lead production will increase to 9.41 million tons this year, while demand is forecast at 9.3 million tons, according to the International Lead and Zinc Study Group.

Lead demand is often weakest in the second quarter, rebounding in the next three months as higher temperatures in the northern hemisphere make battery failure more likely, North said. Batteries account for 80 percent of global demand, according to Bank of America Merrill Lynch.

Lead rose 2.9 percent to $1,858 a ton by 3:04 p.m. in London.