CRUDE OIL
We are not surprised with a slight retrenchment in crude oil prices this morning as the trade is temporarily unmoved by the relentless Israeli bombardment of suspected Hamas targets in Gaza. It appears the Israelis are trying to soften up positions for a widely anticipated ground war. Several Arab groups, Arab countries and reported terrorist groups have warned there will be serious repercussions of an occupation force. Along those lines, the US Defense Secretary over the weekend suggested the US government is very concerned of an escalation or broadening of the war with the involvement of any other key oil producers in the fighting immediately throwing crude oil prices back to the late September highs around $92.50. Even though the tight global supply theme has lost traction in the press recently, floating storage estimates this week projected a decline of 11%. Furthermore, trading in Brent crude oil calls registered record volume with the skew unsurprisingly favoring the long case. In a negative intermediate development, officials from the Venezuelan oil company Citco were already on their way to the US to resume trade and that could increase supply flow to the US and more importantly could allow the Venezuelan oil sector to secure parts and technology to facilitate their efforts to expand production.
NATURAL GAS
Last week’s EIA storage data was patently bearish with the injection above most estimates and the surplus to the five-year average storage levels increased. We remain bearish with mild temperatures not expected to change until the end of the month. However, with prices approaching 2023 lows, we suspect strategic buying might surface with Chinese and European buyers looking to top off reserves at very cheap price levels.
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.