OPEC decides to leave production levels unchanged, it's believed that Nigeria is overproducing while Iraq is exempt from quotas

Weekly Futures Report

03.17.10 Filed Wednesday 6:15 pm

ALL CHARTS THIS WEEK ARE Daily Bars

Last Last Week (2.17)

May Crude 83.21 82.43

May Heat 215.13 212.77

May XRB (Blended) 230.93 228.68

OPEC, at its current meeting, decided once again to leave production

levels unchanged. They believe that there are enough signs of economic

resurgence to sop up the current glut of crude. This is the eighth

consecutive meeting without a change in quotas. It’s believed that

OPEC is currently overproducing stated levels by a supertanker a day.

OPEC currently supplies 40% of the world’s daily oil supply. It’s

believed that Nigeria is also overproducing while Iraq is exempt from

quotas. Oil now seems content to trade within a range of $70 to $90 as

the lower end of the range would result in production cuts and the high

end of this range would result in production increases. The product

spreads continue to favor gasoline against heating oil. Money flow

continues to be positive for crude. Another positive for this market was

that the Federal Reserve left short term interest rates unchanged at

their latest FOMC meeting which was a dollar negative and a

commodity market positive.

For the latest week, crude imports dropped while supplies of gasoline

and distillates fell less than forecast. Crude inventories were higher by 1

million barrels. Gas stocks dropped by 1.7 million barrels while

distillates were lower by 1.49 million barrels.

Another positive for the oil market is that it is now emblematic of a

contracting or expanding economy. Previously, higher oil prices were

viewed as a negative for stocks as profit margins were squeezed. Now,

higher stocks equates to higher oil prices as a sign of economic vitality.

That’s the definition of a paradigm shift.

Support Resistance

May Crude 78.50 84.00

May Heat 204.00 217.80

May Gas 220.00 232.10

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METALS

Last Last Week

June Gold 1125.30 1109.40

May Silver 17.523 17.10

April Platinum 1635.60 1594.70

Gold rallied ahead of the Fed’s rate decision but declined the day after.

Part of the problem on Wednesday was gold’s linkage with the EC. The

EC declined from a five week high on the idea that the problems with

Greek indebtedness have not been resolved. German Chancellor

Merkel’s political party has reversed its recent position and now feel

that Greece should approach the International Monetary Fund for a

bailout, in necessary. This reflected badly on the EC and thus the

selling. Currently, gold is trading as the anti currency and interest