Written Commentary
CRUDE OIL
With a $3.60 trading range, an aggressive early washout, and an impressive recovery into the close yesterday, it is possible that an overbought technical condition in crude oil was balanced on Thursday thereby clearing the way for a long-awaited trade above $80.00. The market is supported by the return of China to the markets and from a Bank of America prediction that the world oil market will remain in a deficit because OPEC plus failed to increase production this month by more than the prescribed 400,000 barrels per day.
Underpinning gasoline prices near this week’s highs are reports that Indian refiners are seeing enough demand for products that they are raising their refinery activity rates, significant increases in Chinese fuel prices are being seen and there have been reports that Brazil August diesel demand reached the highest level in 21 years.
NATURAL GAS
While we have predicted significant volatility in the petroleum markets ahead, volatility in the natural gas market could be significantly larger. Certainly, the promise from Russia’s Putin to deliver all the gas needed for Europe and Asia is boastful but the promise did serve to puncture bullish sentiment temporarily. Another temporary undermining of natural gas prices came from this week’s EIA natural gas storage report which showed a large weekly injection of 118 BCF.
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.
