Written Commentary
CRUDE OIL
The chance of a cease-fire in Gaza appeared to improve overnight after Hamas and Fatah agreed to end their divisions and form a unity government. The negotiations were held in China, and China’s foreign ministry reported this news. This is viewed as bearish as it eases concerns about supply interruptions from the war. On the other hand, hints of a potential ECB rate cut in September from the Vice President of the Bank improves the outlook for oil consumption. Russia’s Deputy Prime Minister Alexander Novak maintains that the nation’s oil output is close to its OPEC+ quota. Last month, they conceded that they had exceed their quota in May. OPEC+ plans to start to unwinding some of their production cuts in October. Sluggish global demand is still a concern, especially in China after disappointing GDP and crude consumption numbers last week. A Reuters survey shows traders are looking for a 2.5 million-barrel decline in crude oil stocks this week, with gasoline expected to be down 0.5 million and distillates up 30,000 barrels. Refinery runs are expected to be down 0.3% to 93.4%. As of last week, crude stocks were down 17.2 million barrels from a year ago and 21.6 million below the five-year average. Gasoline stocks were 3.3 million barrels above a year ago and 65,000 above the five-year average. Distillate stocks were 3.5 million above a year ago but 9.1 million below the five year average.
PRODUCT MARKETS
September RBOB fell right to the 200-day moving average yesterday around 2.3822 but reversed and closed higher on the day. A break below there would leave next support at 2.3309.
NATURAL GAS
Hotter than normal temperatures are expected to return to most of the Lower 48 over the next two weeks, which should support higher US gas consumption. The 8-14-day forecast shows above normal temperatures everywhere except for south Texas. That and the restart of LNG exports out of Freeport, Texas after it shut down earlier this month for Hurricane Beryl could help reduce US oversupply. For this week’s US inventory report , a Reuters survey shows traders are looking for an increase of 11-24 billion cubic feet from last week. Last week’s report showed US supply was running 8.4% above a year ago and 16.9% above the five-year average as of July 12. This was a relative improvement from the +9.7% and +18.7% readings the previous week. China’s National Energy Administration expects the nation’s natural gas demand to grow between 6.5% to 7.7% this year to 420-425 billion cubic meters (bcm). They expect domestic production to reach 246 bcm, up more than 10 bcm from 2023.
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.
