Written Commentary
CRUDE OIL
September Crude Oil extended its move lower overnight following the peak on Monday when the sanctions on Russian crude oil included a 50-day deadline, which the trade viewed as soft. The API numbers last were also bearish against expectations, with sources telling Reuters that US API crude oil stocks were +839,000 barrels last week versus an average trade expectation for -600,000. Gasoline stocks were +1.93 million versus -1 million expected, and distillates were +828,000 versus +200,000 expected. The EIA report will be released this morning, and in addition to the expectations listed above, refinery runs are expect to be -0.2% at 94.5%. As of last week, US crude stocks were the lowest for this point in the season in at least six years. In their monthly report released yesterday OPEC left its forecasts for global oil demand growth unchanged in 2025 and 2026, saying India, China, and Brazil demand has outperformed expectations.
NATURAL GAS
September Natural Gas extended this week’s rally a bit overnight as the weather forecast continues to show a warm trend over much of the lower 48 US states for the next two weeks. However, US production continues at a record pace, which limits the potential for a significant slowdown in the weekly supply builds. The US National Hurricane Center gave a tropical system off the east coast of Florida about a 40% chance of strengthening into a tropical cyclone over the next week as it moves west into the Gulf of Mexico off Louisiana, Mississippi, Alabama and Florida. The threat of damage to US natural production is limited, as only about 2% of US gas output comes from the Gulf of Mexico. However, severe storms could hurt gas demand if power is interrupted by the storms and LNG exports facilities have to close down. LSEG said average gas output in the Lower 48 rose to 106.9 billion cubic feet per day so far in July, up from a monthly record of 106.4 bcfd in June. The average amount of gas flowing to the eight big US LNG export plants rose to 15.8 bcfd so far in July, up from 14.3 bcfd in June and 15.0 bcfd in May, but below the monthly record high of 16.0 bcfd in April.
PRODUCTS
The API report showed US gasoline stocks were +1.93 million last week versus an average expectation of -1 million from the Reuters poll. Distillates were +828,000 versus +200,000 expected. The EIA report will be released this morning. As of last week, distillates stocks were the lowest since April 2005, but gasoline stocks were above the four year average for this time of year.
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.
