Written Commentary
CRUDE OIL
January Crude oil was slightly higher overnight following yesterday’s selloff, as the market may have overreacted to the potential bearish news that Israel and Lebanon had agreed to terms of a deal to end the Israel-Hezbollah conflict. Overnight, a senior Israeli official said Israel looked set to approve a ceasefire with Hezbollah, and similar sentiment was expressed by the Lebanese Foreign Minister, yet hostilities continued. Kyiv sustained a Russian drone attack overnight. Neither conflict has had any direct effect on global oil supply to date, but escalation or fears of escalation diverted the market’s attention from the disappointing demand outlook from China. Azerbaijan’s Energy Minister told Reuters that OPEC+ may consider leaving its output cuts in place when they meet on Sunday. President elect Trump said on Monday that he would imposed a 25% tariff on all products coming into the US from Canada and Mexico, but it is unclear whether that would include crude oil. Most analysts interviews are skeptical it would include crude oil. The head of the IEA told a conference on Monday that the supply of oil and gas will be comfortable this year and next unless major geopolitical escalation happens.
PRODUCT MARKETS
January RBOB is slightly higher this morning in sympathy with crude oil. The US is expected to see a record number of people travelling for Thanksgiving which could pull US supply lower next week.
NATURAL GAS
January Natural Gas is near unchanged this morning and inside yesterday’s range. The market has consolidated for two sessions following a steep rally of contract lows from early this month that left the market short term overbought. The arrival of seasonably cold weather has improved the outlook for the market following an unseasonably warm autumn. Colder than normal is expected from November 29-December 4, with closer to normal conditions after that. LSEG is looking for gas demand (including exports) to jump from 115.4 bcfd this week to 132.4 next week.
>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.
