Crude oil futures rallied on the idea that economic strength is gaining momentum

Weekly Futures Report

02.17.10 Filed Wednesday 6:20 pm

ALL CHARTS THIS WEEK ARE Daily Bars

Last Last Week (2.11)

Apr Crude 77.68 75.72

Apr Heat 201.22 197.12

Apr XRB (Blended) 212.50 206.57

Even on a day when the dollar was strong across the board crude oil

managed to rally on the idea that economic strength is gaining

momentum. Yesterday, crude oil rallied as the dollar fell against most

major foreign currencies. Today, industrial production and capacity

utilization showed expansion and this was a positive for the oil market.

Yesterday’s gain was the largest in four months of trading. Three

quarters of the companies that have reported earnings this year have

beaten Wall Street estimates. The US Department of Energy report

scheduled for release on Thursday due to the holiday on Monday

expected to show that crude stocks increased by 1.7 2 million barrels

last week. Distillates stocks are expected to have fallen by 1.5 million

barrels while gasoline stocks are expected to have climbed 1.5 million.

Overall supply is ample and demand is weak. Oil is getting sponsorship

as an asset play by hedge funds and the correlation between oil and

stocks is, for the moment, highly correlated. Money flow in crude oil is

positive.

Support Resistance

Apr Crude 72.50 80.20

Apr Heat 188.00 207.00

Apr Gas 200.50 218.00

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METALS

Last Last Week

Apr Gold 1109.00 1094.70

Mar Silver 15.93 15.59

April Platinum 1530.00 1519.30

Gold fell in price on Wednesday due to profit-taking after the recent

run-up. Money flow in gold continues to be negative. The dollar was

stronger on Wednesday as the market continues to be concerned about

Greek indebtedness and the potential consequence this may have to the

European Union. Gold has lately been trading as the anti-currency.

Gold is very uncomplicated. Gold does not have budget deficits. Gold

does not have political risk. Gold does not have a balance of trade

consideration. Gold is exchangeable for any currency on earth. A

cautionary note however would be the possibility of deflationary

pressures as a consequence of more trouble within the EC or further

credit tightening by China.

Support Resistance

April Gold 1080.00 1141.00

Mar Silver 15.17 16.70

April Plat 1496.00 1565.00

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SOFTS

Last Last Week

Mar Coffee 132.20

Mar Sugar 27.53

Sugar fell by the most in over two weeks after some players decided that

the rally of over 4% last week may have been overdone. Fundamentally

India may increase its production from last year due to better weather.

Sugar was down 3.4% on Wednesday the trading on the LI FFE

exchange. Many market observers believe the fundamental picture is

improving gradually. Prices doubled last year as a result of excess rains

in Brazil and insufficient rains in India for sugarcane production.

Money flow in sugar is negative. Money flow in coffee is also negative.

Support Resistance

Mar Coffee 130.00 136.00

Mar Sugar 25.00 28.00

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Last Last Week

Mar Soybeans 9.514 9.43

Mar Corn 3.60 3.632

Mar Wheat 4.946 4.934

Soybeans fell in price on Wednesday as the recent run up to one month

highs was viewed as excessive. Another negative feature to the market

was the belief that soybean acreage may be at record levels for the

coming year. US Soybeans account for 36% of world production.

Soybean planting intentions should increase by 1.4% to 78.5 million

acres. Another major feature to the market is the generally stronger

dollar. A stronger dollar makes US soybeans that much more expensive

for importers. Money flow in soybeans remains positive, however.

Money flow in corn is also positive. Planting intentions for corn are

expected at 87.5 million acres, down from a previous estimate of 88.5

million acres.

Money flow in wheat is negative. Hedge funds and speculators have

increased their short positions in this commodity to the highest level

since 1993. Technicians see a very high short position as a market

positive as these contracts will eventually have to be bought back. Short

positions increased by 14% from a week earlier.

Support Resistance

Mar Soybeans 9.38 9.79

Mar Corn 3.50 3.71

Mar Wheat 4.80 5.21

Chuck Kespert

NY/NY

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT

LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO

REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS

LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN

FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN

HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS

SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS

THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF

HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE

FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN

COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL

TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO

ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING

LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT

ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS

RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF

ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY

ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL

PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT

ACTUAL TRADING RESULTS.

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