Written Commentary
CRUDE OIL
March Crude Oil reached its highest level since September 29 early Wednesday, as the fallout from the winter storm and subsequent extreme cold, as well as the lower dollar lent support. The dollar has fallen to its lowest level in four years this week, and this action by default supports prices in dollar-based commodities like crude oil. Adding to the fallout from the storm, Mexico’s state oil company Pemex shut oil platforms and crude-exporting terminals in the Gulf of Mexico early this week due to bad weather. Bloomberg reported that offshore platforms halted operations at 6am Monday. Earlier this week Reuters reported that that an estimated 2 million barrels per day or roughly 15% of US crude oil output was lost from the storms over the weekend. Kazakhstan said on Wednesday that it was restarting its biggest oilfield, Tengiz, in stages and it would try to reach full production within in a week, but others have put that number at less than 50%, following the recent fires.
PRODUCTS
Product prices extended their recent gains early Wednesday, as the market reacts to the drop in US crop production and refinery operations from the winter storm and extreme cold this week. The API report released late Tuesday was supportive against expectations gasoline but not diesel, with gasoline stocks reported to be -415,000 barrels for the week ending January 23 versus +1.0 million expected and distillates +2.01 million versus -600,000 expected.
NATURAL GAS
Marrch Natural Gas was lower early Wednesday as it continued to give back some of the huge gains the market made in the leadup to the winter weather this week. As of late Tuesday, there were still more than 400,000 homes and businesses without power. The extreme cold weather is expected to continue through the weekend in eastern half of the US, and there is a potential “hurricane bomb” developing in the Atlantic off east coast, which may or may not bring heavy snows to the Carolinas and the mid-Atlantic. The 6-10 and 8-14 day forecasts have below normal temps sticking around the eastern US but not as extreme as they have been.
Interested in more futures markets? Explore our Market Dashboards here.
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.
