Written Commentary
CRUDE OIL
February Crude Oil was higher early Monday as the market appeared to finally paying attention to the US seizure of sanctioned oil tankers near Venezuela, with news that the Coast Guard was pursuing another one on Sunday, which would be the second operation of the weekend and the third in less than two weeks. That and President Trump’s recent announcement of a “total and complete” blockade of sanctioned Venezuelan oil tankers have reintroduced a geopolitical focus to the market after prices fell to their lowest level since April last week. US special envoy Steve Witkoff said on Sunday that talks between US, European and Ukrainian officials and the separate talks with Russian negotiators had been productive, but this was contradicted by a Russian official who said the changed made by Ukraine and European officials to the US proposals had not improved prospects for peace. In the meantime the fighting continues, with news that Ukraine drones struck a Russian shadow fleet oil tanker in the Mediterranean Sea with aerial drones for the first time and that Russian troops hit port and energy infrastructure in an attack on Ukraine’s Odesa region. Peace prospects may be damaged by friction between the US and Russia over Venezuela, a country the Putin has been allied with. The Baker Hughes rig count showed US oil rigs in operation were down 8 rigs to 406 last week. This was down from 483 rigs a year ago and below the five-year average of 469. This was the fewest number of rigs in operation since September 2024.
PRODUCTS
Like Crude Oil, RBOB and ULSD were sharply higher early Monday on news that the US Coast Guard was pursing another sanctioned vessel around Venezuela and mixed updates on the peace proposals for Ukraine. Chinese customs data showed the nations imports of fuel oil in November totaled 454,957 barrels per day up 15% from October.
NATURAL GAS
February Natural Gas prices started out higher early Monday but gave back their gains as the session progressed, as spillover support from the crude oil sector faded in the face of the forecast for mild weather in the US. The 6-10 and 8-14-day forecasts show above normal temperatures across almost the entire lower 48 states out through January 4, the exceptions being northern New England and the west coast, which are expected to see normal or slightly below normal temps. The Baker Hughes rig count showed US natural gas rigs in operation were unchanged at 127 rigs last week. This was up from 102 rigs a year ago and above the five-year average of 113. LSEG said on Friday that average gas output in the Lower 48 states held at 109.6 billion cubic feet per day (bcfd) so far in December, in line with November’s record. They also projected average gas demand in the lower 48 states, including exports, to fall from 144.6 bcfd last week to 127.5 bcfd over the next two weeks. LSEG also reported that average gas flows to the eight large US LNG export plants have risen to 18.5 bcfd so far this month, up from a monthly record high of 18.2 bcfd in November. Reuters reported that Australia will make exporters of liquefied natural gas from the country’s east coast keep up to a quarter of their output for domestic use from 2027 to curb price spikes and help fill a long-forecast supply gap. The next EIA weekly storage update will be released on Monday, December 29.
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.
