Written Commentary
CRUDE OIL
While many analysts and Middle East oil producers are suggesting a coordinated global strategic oil sale led by the US will not overcome the shortfall of production from OPEC, the markets clearly fear oversupply this morning. According to Goldman Sachs the prospect of global SPR releases has been factored into prices already. On the other hand, the trade predicts that China may release 7 million barrels from their strategic reserve, with many suggesting that release could come alongside a Chinese strategic oil auction.
Unfortunately for the bull camp this week’s Amsterdam, Rotterdam and Antwerp storage figures showed a build in all key supplies except for jet fuel. It should also be noted that European crack spreads softened yesterday, most likely because of the inventory builds in Europe.
NATURAL GAS
The weekly EIA natural gas storage report was patently bearish for prices, but the negative impact of the report was mitigated by estimates of a moderate build estimate floated earlier in the week. Adding into the bearishness is a contraction in the deficit versus the 5-year average storage level. While the US temperature forecast has not been the primary driving force for natural gas prices the latest forecast shifted bearish with the low temperature area in the US narrowed significantly.
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.
