Explore Special Offers & White Papers from ADMIS

Nat Gas Remains in Liquidation Mode


Not surprisingly, natural gas ranged down sharply yesterday and remains in a liquidation mode which could result in a retest of the early July consolidation zone lows at $5.73. In fact, wholesale prices and futures prices remain under pressure despite widespread evidence of supply hoarding throughout the world. Overnight reports indicate that extreme tightness of shipping space has resulted in a massive spike in Asian liquefied natural gas tankers which in way confirms ongoing efforts to build strategic storage supply. According to Bloomberg LNG freight rates have reached $450,000 per day which is a record level. Bloomberg overnight also reported that supply levels in Europe and Japan are now higher than average heading into the winter months with European gas storage sites estimated to be 92% full and German supplies reportedly at 95% of capacity. With European and North American temperatures expected to be mild for the next two weeks and Ukraine indicating Russian gas flows through their pipelines remains steady more declines are expected. In a shorter-term negative, Scandinavian, Dutch, and German wholesale prices are under significant pressure meaning that aggressive buying for storage has become less aggressive.

gas burner


While the path of least resistance in crude oil is pointing down today from a 2.7% weekly jump in ARA crude oil stocks in storage, early corrective action in equities, a strengthening dollar, higher treasury yields and projections of softening energy demand from Bloomberg news, the crude oil market has generally tracked positive in the early hours. However, WTI prices should remain softer than Brent crude prices given renewed strength in the dollar and pressure from the anticipated release of supply from the US Strategic Petroleum Reserve. In retrospect, with a downside failure on the charts in crude oil yesterday taking place in the face of an extension of risk-on in equities, reports that the OPEC+ 2 million bpd production cut vote was unanimous and given weakness in the face of reports that Indian refiners have halted spot oil purchases from Russia (because of EU sanctions) the bear camp has clearly gained control. Seeing India slow or halt purchases from Russia shifts that demand toward the world markets. The trade is also aware of an impending 15-million-barrel oil sale from the SPR, and fear of slower Chinese oil imports has escalated after China announced it was delaying the release of its GDP report until after the central planning meeting adjourns. In addition to bearish internal supply and demand factors, energy prices are likely to remain under indirect pressure from the highest US treasury yields since July 2011 and from ongoing strength in the US dollar.


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.

Latest News & Market Commentary

Explore Special Offers & White Papers from ADMIS

Get Started