Written Commentary
CRUDE OIL
Crude oil has regained upside momentum ahead of the weekly US supply window and is more than $19 above last week’s low. The market is volatile, but there could be enough supply-side support to extend the current recovery move. The Russian invasion of Ukraine continues to create supply bottlenecks for Western Europe. Indications that the EU will not embargo Russian crude oil pressured the market yesterday. Reports that storm damage to the Caspian pipeline could reduce output by 1 million barrels per day (bpd) have provided a boost to energy prices this morning. Trade expectations for the weekly EIA report call for a small gain in US crude stocks.
The product markets finished Tuesday with mixed results, but both are higher this morning. ULSD continues to be the strongest member of the complex. Russian refineries are reportedly cutting back on their diesel output, with nearly half of their exports normally heading to Europe. US distillate stocks are close to 8-year lows. Implied gasoline demand has been just under 9 million bpd for the past two weeks, and they may climb above there this week.
NATURAL GAS
Since its two-day downdraft earlier this month, natural gas has seen two periods of consolidation that were followed by upside breakouts. Yesterday, April, May and June natural gas traded to new contract highs and finished with strong gains. All three contracts have climbed further into new high ground this morning. The latest 8-14-day forecast has a shift towards cooler temperatures over much of the US, and that should lead to an increase of heating and power plant demand for natural gas.
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.
