Written Commentary
CRUDE OIL
May Crude Oil reversed lower Monday morning in the wake of a Trump announcement via Truth Social that he has instructed the US defense department to suspend strikes on Iranian power plants for a five-day period after productive talks with Iran government officials over the weekend. So far today, the market has an outside reversal day going, and the market was holding its declines despite some contradictory comments from news sources in Iran. The situation remains volatile, with the trade trying to assess what the Trump announcement means, the key issue being whether the Straif of Hormuz can reopen and stay open. Over the weekend President Trump warned that Iranian power plants would be destroyed if Tehran failed to “fully open” the Strait of Hormuz to all shipping within 48 hours, and he has set a deadline of around 7:44 p.m. EDT on Monday.
PRODUCTS
New highs in May RBOB and May ULSD overnight prior to the selloff that came in the wake of the Trump announcement leave open the possibility of key reversal tops in both markets, if volume is high. Reuters reported over the weekend that US gasoline pump prices had already increased more than 30% this month and that retail diesel prices had were up roughly 70%. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 2,851 contracts of RBOB for the week ending March 17, increasing their net long to 79,869. This is towards the upper end of the historic range but short of the 2025 high of 100,000 contracts.
NATURAL GAS
May Natural sold off in the wake of the Trump announcement this morning but it was already under pressure from mild weather in the US and limited prospects for a demand driven rally. The US market has been insulated from global supply tightness because US LNG exports are already running at near capacity levels. LSEG reported on Friday that average gas output in the US lower 48 states had risen to 109.8 billion cubic feet per day (bcfd) so far in March, up from 109.2 bcfd in February but still short of the record 110.6 bcfd from December. Average gas flows to the nine big US LNG export plants are running around 18.5 bcfd so far this month, down from a record 18.7 bcfd in February. The 6-10 and 8-14 day forecasts show above normal temperatures across most of the lower 48, which will limit heating demand.
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.
