Explore Special Offers & White Papers from ADMIS

A Cut in Russian Gas to Poland


Not surprisingly, bullish, and bearish fundamental developments are flowing freely in the petroleum markets. While not a direct impact on crude oil pricing, the Russian halt of gas flow to Poland and Bulgaria favors the bull camp, as that increases the prospect of an EU ban of all Russian energy supply. However, the lack of upside follow-through in crude oil today highlights a market held back by growing global demand fears.

With gasoline this morning forging a fresh high for the move we think near record diesel prices and record jet fuel prices are dragging RBOB higher. Clearly, building expectations of a European ban of Russian oil is a significant supply threat capable of lifting all boats in the petroleum complex. It should be noted that Valero Energy posted a significant jump in the first quarter profit off very significant refinery margins, Asian refinery margins are at record levels and jet fuel refinery margins are making new records daily. Therefore, the profit incentive is in place for refiners to add activity but that is unlikely to halt a tightening of product supply in the near-term.


While the natural gas market upside action yesterday was unimpressive considering a halt in Russian gas shipments to Poland and Bulgaria, the June contract continues to solidify the $7.00 level as a key support point. In fact, the Russians might be preempting a total EU ban of Russian energy supply with a shutdown of their LNG pipelines. With European cash LNG prices continuing to run at 6 times US cash prices, the prospect of unending capacity US exports is solidified. It should be noted that Poland has attempted to solicit Gazprom to restart supply flow and has indicated they will seek alternative supply.

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