CRUDE OIL
March Crude Oil extended Friday’s rally overnight to trade to its highest level since early June. Brent crude traded above $80 for the first time in more than four months, and Mideast crude premiums are reportedly the highest since October 2023. The main catalyst for this rally has been a move by the US Treasury on Friday to impose wider sanctions on Russian oil, including on a couple of key gas and oil producers but also on 183 vessels that are part of the “shadow fleet” that has been used to ship Russian oil to India and China. This is expected to cause a severe disruption of supply to those countries and has reportedly left them scrambling for oil from the Middle East, Africa and the Americas. The sanctions include a wind-down period that lasts until March 12, so there may not be any actual disruptions occurring just yet. OPEC has spare capacity, which could help make up for the shortfall. OPEC+ (which includes Russia) is currently holding back 5.86 million barrels per day. Energy markets have also seen support recently from the arrival of wintry weather in the US, as well as colder than normal temps in parts of Europe.
NATURAL GAS
March Natural Gas opened sharply higher overnight, at its highest level since June 13. The market has since sold off and appears intent on closing the overnight gap. Cold weather is expected to stick around for the next couple of weeks, which should allow for a more normal withdrawal from US storage. The NWS 6-10 day forecast shows a mass of much below temperatures covering the eastern Rockies, the Great Plains, and the Midwest and below normal temperatures elsewhere (except for southern Florida and Maine.) The 8-14-day is less extreme, but it still shows below normal temperatures dominating the lower 48, except for southern Florida and central California. The Baker Hughes rig count showed US natural gas rigs in operation fell to 100 last week, down from 103 the previous week, 117 a year ago, and below the five-year average of 116. This is the smallest rig count since November 29 and is the first time since late November that both oil and gas rigs have declined from the previous week. EIA has said they are looking for higher gas prices to encourage more drilling activity this year. Analysts are projecting each of the next three weekly storage reports to show net withdrawals of 200 billion cubic feet of gas or more. The Trump administration is expected to swiftly lift a moratorium on new LNG export permits imposed by the Biden Administration, which will boost US export capability.
PRODUCT MARKETS
The product markets are drawing support from the rally in crude oil, but ULSD is leading this morning, as the arrival of consistently colder weather in the US is boosting demand for heating oil. The latest NWS 6-10 and 8-14-day forecasts show much below normal temperatures over most of the lower 48 US states, with some extreme cold showing up in the 6-10-day. Cold weather in Texas and Louisiana may force refineries to scale back. March ULSD traded to its highest level since July 9 overnight.
>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.
© 2025 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.
Latest News & Market Commentary
ADM & Industry News
Happy Holidays From ADM Investor Services!
December 18, 2024
The Ghost in the Machine Q4 2024
November 15, 2024