Written Commentary
CRUDE OIL
August Crude Oil extended its rally overnight and was approaching the two-year high from April. Traders are optimistic about summer gasoline demand, especially with the US Fourth of July holiday this week. The American Automobile Association has forecast travel this weekend to be 5.2% higher than last year, with car travel up 4.8%. There are also ongoing concerns that the conflicts in the Middle East and Ukraine will interrupt supplies, the latest being concerns that the Israeli-Hezbollah tensions could escalate to all-out war. Hurricane Beryl is expected to reached Mexico’s Yucatan Peninsula on Friday before weakening into a tropical storm and entering the Bay of Campeche in the Gulf of Mexico on Saturday and potentially threaten Mexico’s oil infrastructure. A Reuters poll for this week’s US inventory reports call for crude stocks to be down 200,000 barrels for the week ending June 28, with gasoline stocks -1.5 million, distillates -1.1 million, and refinery runs +0.9%. Last week’s report showed US crude stocks at 460.7 million barrels, up from 453.7 million a year ago but below the five-year average of 467.7 million. Shell Oil said it will pause construction on a biofuels plant in the Netherlands, citing poor market conditions.
PRODUCT MARKETS
Like crude oil, RBOB is rallying off of expectations for a strong driving weekend. The Reuters poll is calling for US gasoline stocks to be down 1.5 million barrels in this week’s inventory reports. Last week’s report showed US gasoline stocks at 233.9 million barrels, up from 231.2 million a year ago but below the five-year average of 234.2 million. ULSD has also extended its rally as well, reaching its highest level since April 19. Distillate stocks are expected to be down 1.1 million barrels in this week’s inventory reports. Last week’s report put US distillate stocks at 121.3 million barrels, down slightly from 121.7 million a year ago and well below the five-year average of 132.9 million.
NATURAL GAS
Natural gas continues its march downward, as ample supplies and a moderating weather forecast leave the bears in control. Mild temperatures across the nation’s mid-section this week are lowering cooling demand. The 6-10 day forecast calls for near normal temperatures in the Midwest and northern Plains, with much above normal temperatures out west and on the east coast. The 8-12-day forecast calls for above normal temperatures over most of the lower 48 but not as extreme on the coasts. A Reuters poll for this week’s natural gas storage report calls for a gain of 22-35 bcf for the week ending June 28. Last week’s report showed US working gas in storage was 3,097 bcf versus 2,783 a year ago and a five year average of 2,569.
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.
