Bulls Regain Thin Measure of Control
The crude oil market has been “saved” by a shift back into a global risk on environment. Adding into the positive track this morning is the extreme short-term oversold status of the energy complex from last week. On the other hand, the sudden shift to risk on is called into question by a likely extension of a pattern of weak US scheduled data later today and to a lesser degree by looming fears of US Fed tapering.
With the gasoline market last week falling by $0.25 and the EPA recommending reductions in biofuel blending mandates, petroleum products like gasoline have likely made a near-term low. While we suspect that the upcoming US holiday has already resulted in an increase in supply flow toward the retail outlets, brisk demand at the end of this week could add to the potential for a floor under gasoline prices.
With a violent 2-day range at the end of last week of $0.20 and the October contract unable to hold onto those gains last Friday, the gas market looks to remain in a precarious condition. However, while the US temperature forecast out to September 5th has the lowest overall national temperature forecast in weeks there are pockets of much above normal temps forecast for the coming days and that combined with broad based risk-on vibe should give the bull camp some capacity.
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.