Written Commentary
CRUDE OIL
While the crude oil market was able to recover this morning following the significant reversal and washout yesterday, we think the bull camp has been threatened. On the other hand, yesterday’s action did question the level of sustainable energy demand improvement, but that potential bearish issue was heavily offset by the failure of OPEC+ to reach an agreement to continue to return idled production to the market.
The gasoline market also saw a tremendous reversal from a strong initial rally in the US yesterday and that sets a negative technical condition into the market. However, signs of improving demand have been documented overnight, with reports of significant US gasoline consumption through the Independence Day holiday which some analysts think was the highest since September 2019.
NATURAL GAS
Even though the natural gas market has missed out on a lot of the upside fireworks seen in the petroleum complex over the prior year, a massive trading range and reversal on Tuesday suggest the gas market is also entering a high volatility status. Certainly, the trade should fear a setback in demand in the event that the virus variant results in some reversion to lockdown, but we suspect the natural gas market has only a small measure of demand premium factored into prices.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
