Written Commentary
CRUDE OIL
August Crude Oil was lower overnight as concerns about Hurricane Beryl continued to ease. Major refineries along the Texas Coast appeared to see minimal damage for the storm. Ports and refiners are for the most part expected to resume operations today. The trade is also watching for progress on the ceasefire talks for Gaza, which are being mediated by Qatar and Egypt. The White House said there are still gaps between the two sides. Israeli Prime Minister Netanyahu said yesterday the deal must not prevent Israel from resume fighting until its objectives are met. Hamas said the a new Israeli push into Gaza threatens the potential agreement. Ukraine launched a drone strike overnight that hit two power stations and set an oil depot on fire in southern Russia in retaliation for Russia’s attack on a children’s hospital on Monday. Average trade expectations for this week’s US inventory reports call for a 250,000 barrel decline in US crude stocks, a 300,000 barrel decline in distillates, and a 1.9 million-barrel decline in gasoline. Refinery runs are expected to be up 0.6% from last week’s 93.5%. Brazil’s Petrobas hiked gasoline prices for the first time in 11 months.
Fed Chair Powell appears before Congress today, and traders will be parsing his statements for clues on the potential for a rate cut, which would be viewed as bullish for demand. The Commitments of Traders report showed managed money traders were net buyers of 13,265 contracts of crude oil for the week ending July 12, increasing their net long to 249,081. This is their largest net long since October but only about half of the record 496,000 from 2018.
PRODUCT MARKETS
The product markets may need more evidence of strong demand in this week’s storage reports to keep resume their rallies. The interruptions from the storm appear to be minimal. The Commitments of Traders report showed managed money traders were net sellers of 2,846 contracts of RBOB for the week ending July 12, reducing their net long to 31,229. This is down from 83,000+ in April.
NATURAL GAS
August Natural Gas saw an impressive rally yesterday after opening at its lowest level since February 20 and continued its gains overnight. The fact that Hurricane Beryl landed without causing any significant damage to LNG facilities eased concerns about a potential backup in storage. Freeport LNG, the third largest liquified natural gas facility in the US, said over the weekend that it had ramped down production and said it would resume operations after the storm had passed. Hotter weather is boosting demand expectations. The extended forecast call for above-normal temperatures across almost the entire lower 48 states, with extreme heat expected from the northern Rockies to the mid-Atlantic in the 6-10 fay forecast. Record temperatures are being experience this week in the Las Vegas. The Commitments of Traders report showed managed money traders were net sellers of 31,459 contracts of natural gas for the week ending July 12, reducing their net long to 3,166. This is close to a neutral position.
Interested in more futures markets? Explore our Market Dashboards here.
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.
