The complex managed to find support over the last two sessions after sharp losses registered during the prior week. For the most part it appeared to be short covering as the market had reached oversold technical levels, with the entire complex seeing RSI dip well below 20% during Wednesday’s selloff. Statements from the Saudi Energy Minister also offered support, as he indicated that they were nearing an agreement to extend production cuts into the second half of the year.
The reported meeting of the Russian and Saudi energy ministries on June 10th should provide clues as to whether Russia is on board with production restraint. Whether they and other OPEC+ members are willing to yield market share to the US will remain a key question as we approach the full ministerial meeting later this month.
With the preponderance of fundamentals still negative as US production continues to impress, any follow through of the recent rally will likely find resistance in the 55.50-56.00 area basis July crude.
Downside pressure continued after yesterday’s storage report came in well above estimates with a 119 bcf build in stocks. Prices traded down to 2.305 in the July intraday and have since found scattered buying interest into the end of the week on short covering as the market had become technically oversold. Weather continues to generate minimal demand concerns, allowing the market to focus on increased production levels and varying export news. The lower end of our support range at 2.30 looks like it will hold for the near term, although a double bottom was put in today before support emerged. Next week looks to have another above average build in store, with estimates pointing to a 111 injection compared to the 5 year at 92 bcf.
Charts Courtesy of DTN Prophet X
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 views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. 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 ADMIS position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to. The authors of this piece currently maintain positions in the commodities mentioned within this report. Charts Courtesy of DTN Prophet X, EIA.
Contact Us Today
Get free guides and special offers in the Resource Center.
© 2018 Archer Financial Services, Inc.
This is not a solicitation of any order to buy or sell, but merely a collection of information related to Archer Financial services and commodities trading provided by Archer Financial services. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor do they purport to be complete. No responsibility is assumed with respect to any such element, nor with respect to any expression of opinion herein contained.
The risk of loss in trading futures and options on futures can be substantial. Each investor must carefully consider whether this type of investment is appropriate for them. Past performance is not necessarily indicative of future results.