Crude and its products staged a very strong rally for the first two sessions of February

Weekly Futures Report

02.03.10 Filed Wednesday 4:20 pm

ALL CHARTS THIS WEEK ARE Daily Bars

Last Last Week (1.27)

Mar Crude 76.95 73.67

Mar Heat 202.11 192.67

Mar XRB (Blended) 203.45 194.74

Crude and its products staged a very strong rally for the first two

sessions of February. This brought the market to Wednesday’s

Department of Energy report detailing weekly supply and demand. For

the latest reporting week, crude stocks rose by a greater than expected

2.3 million barrels. The trade had been looking for a draw down in

supplies. This bearish aspect to the report was offset by a greater than

expected drawdown in gasoline stocks of 1.3 million barrels. Distillate

stocks were down 948,000 barrels which was less than the trade

expectation of a draw of 1.1 million barrels. Another positive influence

in the market had been an increase in European manufacturing activity.

Also, the persistent cold weather in the highly populated Northeast US

was a positive. A negative feature to the market on Wednesday was

resurgence in the dollar against most major foreign currencies. Market

watchers believe that the market is well supplied. Also, there is more

than ample refinery capacity. Tuesday evening, the American

Petroleum Institute stated that crude stocks had increased by 4.72

million barrels.

Support Resistance

Mar Crude 71.50 79.35

Mar Heat 192.00 210.00

Mar Gas 190.00 208.50

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METALS

Last Last Week

Apr Gold 1110.60 1085.70

Mar Silver 16.375 16.44

April Platinum 1578.40 1492.10

Gold came under moderate selling pressure on Wednesday as the dollar

regained strength against most major foreign currencies. Gold was

being supported by the recent rally in crude oil yet at the same time the

market was influenced by a precipitous decline in copper. Gold

continues to be locked in a very wide trading range. The result of

Friday's unemployment report will indicate the strength or weakness of

the US economy traders will position themselves accordingly. At the

beginning of February, Gold had its biggest two-day gain in over three

months matching the biggest two-day gain for stocks since October.

There is a belief that central banks may increase gold holdings in

reserve. Other market observers are looking for a further stimulus

package coming out of Washington. This would bolster their argument

for an eventual uptick in inflation. Even with the gold market rally,

silver is trading at the exact same price it was trading at one week ago.

Support Resistance

April Gold 1072.00 1115.00

Mar Silver 15.89 17.75

April Plat 1450.00 1562.00

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SOFTS

Last Last Week

Mar Coffee 132.90 133.55

Mar Sugar 28..53 28.36

Coffee came under selling pressure for the first time in February on

Wednesday as the dollar regained strength against major foreign

currencies. The dollar was higher by 3.4% against the EC in January. y.

Coffee was higher by 21% last year due to damaged crops in Colombia

and Brazil. The structure to the market may have changed for many

traders who now believe that coffee has the ability to trade lower due to

an improved supply outlook as well as improved weather conditions

being beneficial to crops. Coffee seems trapped in a wide trading range

between dollar 120 and 145.

Sugar has been some selling pressure lately as the European Union

plans to boost sugar exports. Also improved weather conditions in

Brazil and India has increased the prospect for better crops going

forward. Also India has changed the way it manages sugar. India is the

world's largest consumer. Prices dropped the most in four years as the

government instructed producers to sell sugar on a weekly basis rather

than the usual two weekly basis to increase local supplies. Sugar had

traded to a 29 year high last year with prices doubling over the past 12

months due to damaged sugarcane crops in Brazil and a growing world

deficit. Money flow in sugar remains negative.

Support Resistance

Mar Coffee 130.00 137.00

Mar Sugar 28.50 30.30

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Last Last Week

Mar Soybeans 9.08 9.29

Mar Corn 3.53 3.582

Mar Wheat 4.69 4.836

Soybeans continued to be under selling pressure as increased record

crops are more than offsetting any increase in demand. Farmers are

selling soybeans on any rally. Soybeans were down 13% in December

for the second straight month of declining prices. Also on Wednesday,

the dollar was generally stronger against most major foreign currencies

thereby reducing export demand. Weather in South America remains

favorable for soybean production. Expect lower prices.

As for corn, the current crop of 13.15 billion bushels is up 8.8% from

last year according to the Department of Agriculture. The soybean

harvest was better by 13%. Both crops are the largest on record.

Wheat was down 12% in January. The reason for the decline was

primarily due to slack demand. The USDA is predicting a 19% increase

in global wheat stockpiles for 95.6 million tons. Money flow in wheat

remains negative.

Support Resistance

Mar Soybeans 8.95 9.45

Mar Corn 3.55 3.720

Mar Wheat 4.75 502

Chuck Kespert

NY/NY