Written Commentary
NATURAL GAS
The March contract enters the morning session at the $2.00 level and is holding just above’s yesterday’s new contract low of $1.997. Since early January, natural gas prices have been unable to sustain a recovery move and have now fallen below a key psychological level. Warmer than normal temperatures across the Midwest and northeast US in the latest 6-to-10-day forecast are likely to reduce heating and powerplant demand, and that continues to pressure prices. The EIA forecast this 2024 US dry gas production will reach a record high 104.37 billion cubic feet per day which compares with 2023’s previous record high 103.75 bcf/day. The EIA estimated 2024 US domestic gas consumption would reach a record high 90.64 bcf/day versus 88.96 bcf/day in 2023, but that consumption would fall back to 89.55 bcf/day in 2025. Unless the US weather becomes more seasonally cold, the bears continue to hold the upper hand.
CRUDE OIL
The market trades within a four-day range, as it contends with geopolitical headline flow out of the Middle East and the latest US inventory readings. The outside market tone is mixed to start, with a slightly lower US dollar, more overnight gains in Chinese shares and slightly lower European and US indices. The market will key into a few Fed member speeches today, hoping to gain clarity on rate cuts. Early support this morning comes from geopolitical risks, with Houthi militants firing more anti-ship ballistic missiles from Yemen toward the Southern Red Sea area. The ongoing attacks continue to reroute shipping activity, estimated at 12% of all global trade. Hopes for a ceasefire between Hamas and Israel threaten the risk-premium in the market. US Secretary of State Blinken has traveled to the Middle East this week, which could lead to a de-escalation of tensions. For now, the US Secretary of State says there is still a lot of work to be done, but an agreement is possible and Saudi Arabia says no deal until Gaza aggression is stopped. Ceasefire talk has taken some risk premium out of energy prices. Expectations for this morning’s EIA inventory are for a build in crude inventories of around 1.9 million barrels.
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.
