Written Commentary
CRUDE OIL
With crude oil this morning sitting roughly $2.10 off yesterday’s low and near its highs of the day, the technical path of least resistance is up. However, overall market sentiment is mixed with more declines than gains in global equity markets and in physical commodities. However, the bull camp is given a boost by overnight headlines touting near record Asian purchases of US crude oil which in turn shifts Asian buying trends from the Middle East to the US. Another bullish development from the Asian buying front is a rise of 14% in Chinese apparent oil demand in June. Along those lines, OPEC and the International Energy Agency have reiterated forecasts that Chinese demand will continue to pick up in the 2nd half of this year, with that forecast given validity after Chinese imports of crude oil from Russia hit an all-time high last month. In a supportive longer-term development, the US administration has signaled an increase in royalties and other charges for oil drilling companies operating on federal land as that could impede future production. With the crude oil market action yesterday showing less bullish action than gasoline, the leadership status of gasoline remains in place into the last trading session of the week. While the bear camp should be emboldened after a 2nd straight week of bearish EIA inventory reports and by further strength in the dollar, today’s strength on the charts shifts sentiment back in favor of the bull camp.
NATURAL GAS
Given the sideways consolidation action in natural gas since the middle of March and generally prevailing bearish sentiment, the rally this week has become significant and is given added credence by prices early today sitting right on yesterday’s highs. Certainly, the market initially failed to display sensitivity to a wave of extreme heat for widely diverse geographic areas of the world, but headlines overnight indicating Asian buyers intend to begin building strategic reserves is a fresh bullish demand force adding to this week’s buying trend. Granted, this week’s EIA injection of 41 BCF was on the lower side of the range of expectations and the surplus versus the five-year average stocks level narrowed which minimally mitigates the long-term bearish supply scenario in the US. However, this week’s export terminal feedstock delivery problem will back up of US supply intended for export.
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.
