Explore Special Offers & White Papers from ADMIS

Crude Prices Extend Rally Overnight

CRUDE OIL

In a surprising reaction, crude oil prices overnight have extended yesterday’s recovery rally and have respected the 200-day moving average (now support) at $76.24. In fact, the crude oil market has managed to rally despite signs of falling Asian prices, which should be a sign of softened demand. Along those lines Saudi Aramco is expected to reduce its key oil grade price to Asia for the first time since June. Furthermore, the market has discounted news that the Brent crude oil ETF saw the largest single day outflow since September with an exodus of $108 billion yesterday. In yet another negative development discounted by the trade this morning weekly crude storage in Europe increased by 12% with a gain of 5.7 million barrels in the week ending November 24th. The crude oil market has also rallied despite a smaller than expected decline in API crude oil stocks yesterday afternoon. However, the markets are likely to post a more significant reaction to this morning’s EIA crude oil stocks reading which many suggest is one of the most significant inputs to OPEC+ policy decisions. Fortunately for the bull camp macroeconomic sentiment in the markets is improving despite consistent evidence of softening US scheduled data. Therefore, seeing the US dollar and US interest rates weakening increases the odds a key low has been posted over the last couple of weeks. In our opinion, a debate on extending the duration of production restraint and demands for members to respect quota limits should reduce the probability of a surprise expansion of production restraint. Therefore, the Thursday morning OPEC+ meeting could be delayed again especially if swing producers in Africa (like Angola) refuse to bring their output down and into line with current quota requirements.

oil pumping

NATURAL GAS

While natural gas managed a slight recovery early yesterday, the market ultimately closed poorly and has forged a fresh contract low this morning indicating the bias remains down. In fact, the forecast turned slightly milder out to December 2nd, and the bear camp should be emboldened by predictions from the EU that their “end of winter supply” will likely be near half-full. Another supply negative is a report of an outage at the Sabine Pass export facility which could backup supply in the US storage system. The latest Reuters poll projects EIA gas in storage figures on Thursday to see an increase within a range of 4 bcf to 31 bcf. For now, there is no specific fundamental argument for a halt to the downside action.

 

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.

Latest News & Market Commentary

Explore Special Offers & White Papers from ADMIS

Get Started