Crude Oil Futures swing wildly on conflicting reports by IMF and the Department of Energy release of its report

04.21.10 Filed Wednesday 6:15 pm

ALL CHARTS THIS WEEK ARE Daily Bars

Last Last Week

June Crude 83.68 86.73

June Heat 222.97 226.16

June Gas (Blended) 229.59 234.19

Crude oil initially fell on Wednesday after the Department of Energy

released its report showing that oil supplies unexpectedly increased by

1.8 million barrels to 355 million barrels. The trade was looking for a

drop of 750,000 barrels. There were also increases in heating oil

stockpiles as well as diesel. Counterbalancing this was a report from the

International Monetary Fund which increased its expected usage for

energy in the coming year. The IMF stated that prices should remain

high as global demand continues to rebound and spare supply capacity

diminishes. The Goldman Sachs total returns index which tracks 24

raw commodities is 31% higher than last year at this time. The IMF

believes that there will be a continuing problem between surging

demand from emerging markets and sluggish capacity growth. On

Wednesday, however, crude oil fell, then rallied, then fell again going

into the close giving both bulls and bears something to work with.

Imports of crude oil rose 8.3% to 9.6 million barrels a day for the latest

supporting week. Gasoline imports surged by 32%, the highest since the

week of February 5th. A positive for this market has been the ongoing

stability of the US stock market while a negative was the strength of the

dollar against key foreign currencies. Inventories for gasoline climbed

3.5 million barrels to 2.24 million barrels. The trade was only looking

for an increase of 500 thousand barrels. Of course, a considerable

negative for diesel and jet fuel over the past week was the volcano which

grounded virtually all passenger air traffic over northern Europe for

safety reasons. Although this supply will eventually be worked off but

nevertheless was an exogenous shock to the system. Money flow for

crude and its products remains negative.

Support Resistance

June Crude 82.50 85.00

June Heat 218.00 224.00

June Gas 224.00 233.00

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METALS

Last Last Week

June Gold 1148.80 1159.60

May Silver 18.078 18.415

July Platinum 1740.30 1734.20

Over the past five sessions, gold traded sideways to lower. The main

influence in this market was the chilling effect of the SEC bringing a

civil suit against Goldman Sachs and the effect of a potential bailout

package for Greece. The dollar is generally stronger against the EC on

the idea that growth in the euro zone will be curtailed because of the

potential bailout package and that Eurozone growth and consequently

inflationary pressures will be constrained as austerity measures are

taken not only by Greece but also by Portugal Italy and Spain. On the

other hand, there are other observers who find this problem is a positive

for metals as investors may be prompted to sell their EC holdings and

buy metals as a hedge. They are framing the issue as an eventual crisis

in confidence in paper assets. Either argument is compelling and at least

equally probable until the passage of time proves otherwise. The

ongoing debate does provide ebb and flow to prices with traders with a

bias to the long side generally winning the day. The IMF statement on

Wednesday was a positive for the metals complex. Money flow in metals

remains positive. As long as sovereign debt issues remain unresolved,

there will be safe haven buying interest in the metals on breaks.

Support Resistance

June Gold 1128.00 1160.00

May Silver 17.55 18.2570

July Plat 1680.00 1740.00

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SOFTS

Last Last Week

July Coffee 131.25 131.85

July Sugar 16.69 17.53

Key growing regions in Africa may produce 38% more coffee this year

because of better weather. Another feature to this market is that Brazil

will be starting the coffee harvest earlier than usual this year. Usually,

the harvest begins in May but this year the weather has been such that

harvesting is already underway. Above average rainfall in January

through April and hot weather over the past month has sped up the

development of the coffee beans and as improved their general quality.

Brazilian coffee output may rise to a record this year because of the

weather and the fact that trees are entering the second of a two-year

growth cycle in great shape. The harvest could yield between 46 and 49

million bags this year compared to 39 million bags last year.

Sugar fell to a one-week low on speculation that increased production in

India will enable them to limit imports. Sugar production crashed last

year due to drought conditions during the monsoon season. Rainfall is

now expected to reach the 50 year average and this year. Last year,

sugar nearly doubled in price as the Indian output was cut in half. This

year looks to be exactly the opposite. India's output may jump to 23

million tons up from 18.5 million tons last year.

Support Resistance

July Coffee 130.00 135.50

July Sugar 16.20 18.00

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Last Last Week

July Soybeans 10.06 9.77

July Corn 3.69 3.684

July Wheat 4.996 4.872

Soybeans jumped to a three-year month high, past $10 a bushel on the

idea that China will continue to increase imports. Chinese demand

continues to rise as last year's drought hurt domestic production.

Soybeans are trading at their highest level since January 12.

Corn rose 1.7% on Wednesday for the seventh rally in eight trading

sessions. Earlier in the year corn had fallen 12% based on a forecast for

increased production in Brazil and Argentina. Grain prices are

expected to rise more than 5% in China this year.

Wheat was higher on Wednesday as there was speculation that US

crops may be hurt by damaging weather sometime during this spring's

growing season. Short sellers were seen covering obligations. Overall

wheat is down 7% the year because of reduced demand for grain and

rising global stocks. Money flow in wheat remains negative.

Support Resistance

July Soybeans 9.82 10.25

July Corn 3.55 3.80

July Wheat 4.725 5.12

Chuck Kespert

NY/NY