Written Commentary
CRUDE OIL
While the crude oil market showed modest recovery action on Monday, it has fallen back on the defensive today and has reached a new 2 1/2 month low, more than $11 below the high on Friday. The market has been rattled by comments from Moderna’s CEO on vaccine effectiveness with the new Omicron variant, but it has not sustained losses of the magnitude seen on Friday. The Saudi Oil Minister indicated he was not concerned about demand destruction from the latest virus mutation, but it appears that OPEC+ is concerned, as rumors are circulating that the group is discussing suspending the return of idled production.
Both RBOB and ULSD dropped to new three-month lows overnight, but like crude oil, today’s early losses have been nowhere near the magnitude of the damage on Friday. With a private retail gasoline monitoring service estimating record demand for the Thanksgiving weekend and the potential for lower mass transportation numbers, the gasoline market could be less impacted by demand destruction than many other commodities.
NATURAL GAS
While natural gas was one of the few commodities to stand up to the Omicron washout on Friday, the market weakened on the back of mild US temperature forecasts, and it remains on the defensive this morning with prices reaching a new three-month low. It should be noted that the decline in January natural gas futures on Monday was the largest since early 2019, and that suggests it gas could be in line for catch-up selling.
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.
