Explore Special Offers & White Papers from ADMIS

Natural Gas Prices Poised to Fall


Despite a much smaller than expected injection into weekly storage, natural gas prices caved in and appeared to be poised to fall to consolidation support carved out last week. However, a moderation of temperatures has reduced the prospects of significant tightening at the end of the cooling season. Certainly, the surplus to the 5-year average storage level has declined in the US, but it remains at a double-digit surplus readings. While both 48-state dry gas production and lower 48-states gas demand yesterday increased, gas production is much larger on an absolute basis leaving supply and demand news bearish. In a minimally bearish development, US dry gas exports to Mexico declined as did estimated gas flows to LNG exporters. The path of least resistance is down with a chart failure yesterday and cooler weather forecasts more than offsetting a smaller than expected weekly injection reading. Certainly, the surplus versus the 5-year average stock level continues to decline but some traders are beginning to look forward to the end of the cooling season without inventories shrinking markedly.

gas stove


While the crude oil market is technically overdone and perhaps a bit overconfident in the prospect of improving global energy demand, the outlook for the US economy continues to improve and with the US economy still considered to be the primary engine of the world economy, the gains off last month’s lows are backed up by solid economic evidence. Even the supply-side of the equation favors the bull camp, with Russia pledging to meet its OPEC plus output cut commitments. In fact, Bank of America overnight indicated that if Russia continues to reduce exports, the rally in crude oil prices could accelerate. As indicated many times over the last several months speculators migrated away from long crude oil positions over the last 6 months because of fears of recession from over tightening and that has left the net spec and fund long position in crude oil around 8-year lows. Therefore, crude oil futures should retain significant buying capacity especially if this week’s risk on environment extends. However, surging gasoline pump prices are beginning to eat into disposable income and disposable spending and therefore today’s US personal income and spending readings could have a direct impact on crude oil prices. Expectations for today’s personal income and consumption readings are for positive results. It is also possible that seeing crude oil prices climb above the G7 Russian cap price fosters concern that some entities will begin to find non-Russian supplies (buying interest for all global supplies).


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