Written Commentary
CRUDE OIL
While July Chinese oil imports of crude oil ticked up, that bounce left imports near 4-year lows last month with Chinese oil refiners last month drawing some supply from domestic reserves. The charts in crude oil remain bearish with the recent pattern of lower highs extended and prices likely to make a lower low today. In retrospect, the US nonfarm payroll reading blowout (on the upside), Nigerian exports disrupted, a general global risk on vibe from equities and residual bullish oil views from Goldman Sachs, the market does have some fundamental support. Negative developments facing the market this morning are the lowering of the Goldman Sachs oil price target and a rise of 3.1% in weekly global crude oil in floating storage.
As indicated in our crude oil coverage today, the gasoline market has been presented with softer demand evidence from normal seasonal patterns in the US, from decreased global traffic congestion readings and obviously because of expensive prices. However, a cushion for the gasoline market is the stellar US nonfarm payroll report last Friday. Going forward, the gasoline market could be presented with a major trend junction following this week’s CPI and PPI reports from around the globe. Obviously, the bull camp needs signs of softer inflation to reduce demand destruction fears from rate hike threats and fear that even higher rates will throw the world into recession.
NATURAL GAS
With the natural gas market managing to consolidate and trade sideways last week in the face of a tempering of US ultrahigh temperatures, a bigger than expected EIA injection to storage and ongoing global recession talk, the $8.00 level could “eventually” become fundamental support/value. In the near term, an extension of extremely hot temperatures in the northwest of Europe should temper the downside corrective tilt to start the trading week.
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.
