Written Commentary
CRUDE OIL
October Crude Oil was higher for the fourth straight session overnight, which has allowed the market to reclaim most of its losses from last week’s disappointing jobs report. The markek drew support yesterday from a bigger than expected drop in weekly jobless claims last week, which helped ease concerns that the US was moving into a recession. The trade is concerned about a potential widening of the Mideast conflict, with Israel on alert for a retaliatory strike from Iran after the recent killings of Hamas and Hezbollah leaders, and these concerns have been elevated by reports that an oil tanker near Yemen has been attacked four times over the past 24 hours, apparently by Houthi militants. The tanker reported no damage, and it is proceeding to its next port of call. The bigger than expected draw in US crude oil stocks this week has helped offset bearish demand concerns. US stocks are the lowest they have been at this time of year in at least six years. A Reuters story yesterday said US crude oil refiners are trimming third-quarter production plans as summer driving demand ebbs and as profit margins remain weak. They are budgeting more maintenance downtime after an running at 95% of capacity this summer, according to industry executives’ comments during earnings calls.
NATURAL GAS
September Natural Gas is trading in the upper part of yesterday’s range this morning, after a modest rally this week off Monday’s contract lows. Yesterday’s weekly EIA report showed US gas storage for the week ending August 2 was 3,270 bcf, up +21 bcf from the previous week, which was within the range of expectations of +16 to +35, but the market rallied in the wake of the report. Storage is up 7.9% from a year ago and 15.0% above the five-year average, versus +8.4% and +15.7% in last week’s report. As weeks have passed, the surpluses relative to a year ago and the five-year average have narrowed. The 6-10 and 8-14 day forecasts have a mix of above normal and below normal temperatures across the lower 48, which limits the potential for a late-season surge in cooling demand. Extreme heat is focused over Texas and Louisiana. The west coast and eastern seaboard show below normal temps.
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.
© 2024 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.
