Weekly Futures Report

Gasoline stocks are down however the demand is very sluggish

08.19.09

Filed 2:50 Wednesday     

                                                            Last                                            Last Week   

Oct Crude                                         73.57                                            72.01

Oct Heat                                             194.46                                       192.27

Oct XRB (Blended Gas)                   190.51                                        190.45

Crude oil rose immediately after the release of the Department of Energy report on Wednesday as it stated that crude inventories declined by 8.4 million barrels for the latest week. This was the largest drop since May of 2008. Imports were down 15% to 8.53 million barrels a day due to declining demand. The trade was looking for decline of 1.2 million barrels. Earlier in the session, crude oil had been lower in price as Chinese equities by some technical measures entered into a bear market. Of course, Chinese demand for oil is carefully monitored. Gasoline stocks were down 2 million barrels as well but demand for gasoline is very sluggish. Also distillate inventories remain very high. Additionally, we are entering the end of the peak driving season. All the gas destined for use for this year’s driving season has been refined at this point. Money flow in oil remains negative. Yesterday, the American Petroleum Institute reported that crude stockpiles fell an unexpected 6.13 million barrels last week. Crude oil and its products continue to ignore fundamentals and trade more as an asset class. September crude oil expires on Thursday. According to the API, crude inventories stand at 342 million barrels while gasoline supplies declined 847,000 barrels to 212 million. Traders say that with a lack of conviction and summer trading conditions prevailing, the market should pivot $70 a barrel. OPEC is expected to leave current production levels unchanged at their next regularly scheduled meeting on September 9 in Vienna.  Although, we are entering the beginning of the hurricane season, expect lower prices going forward.

                                                           Support                                     Resistance

Oct Crude                                             66.50                                     74.00 

Oct Heat                                               178.50                                              196.00

Oct Gas                                                174.50                                              194.50                                                                

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METALS

                                                                     Last                                              Last Week     

Dec Gold                                                     943.2                                            947.50

Sept Silver                                                  13.815                                            14.50              

Oct Platinum                                              1240.50                                      1205.00

Gold started out on Wednesday on a weak note as the dollar was stronger and Chinese equities were weaker. This was enough to encourage short positions even though trading conditions remain thin. But the shorts were surprised on the release of the Department of Energy oil report and were forced to cover. The fall in the Shanghai Composite Index of 5.1% signaled to some that that market was entering a bear phase. The composite is down over 20% from highs made just this past August 4th.  Silver had been trading at its lowest levels since early July in the early hours of Wednesday but that too rallied back to unchanged levels by mid-day. A bullish factor for gold was an increase in German consumer confidence. The ongoing negative features for gold are a lack of inflation and the threat of an economic contraction. Money flow in gold remains negative as it does for silver.

 

                                                    Support                                      Resistance

Dec Gold                                             932.00                                           945.00

Sept Silver                                            13.25                                             14.36                

Oct Plat                                               1205.00                                       1255.00

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SOFTS

                                                                       Last                                     Last Week

Sept Coffee                                                  125.45                                    135.40

Oct Sugar                                                     22.67                                       22.79

Some fundamental traders are looking for a break in the price of coffee by as much as 4% as demand slows. Inventories have increased by 115,000 bags to 5.6 million bags over the past month.  Coffee prices have been consistently lower over a successive number of days due to the view that the economy remains sluggish. Coffee had fallen as much as 9% from a two-month high made on August 11. Coffee is expected to trade between $1.25 to $1.35. Until this recent change in market tone, coffee had been up 15% this year.

 

After reaching a new contract high last week, sugar had come under sustained selling pressure. Sugar is down almost 6% from highs seen in August. Fundamental traders are expecting consolidation. Sugar had been bought due to the speculation that the world deficit may be prolonged because India has just suffered through its   driest growing season in 83 years. On the other side, Brazil is expecting a bumper crop. Production may climb to as much as 635,000,000 tons next year. Sugar had rallied almost 75% on the year.

 

                                                          Support                                   Resistance

Sept Coffee                                                    121.50                                     127.70

Oct Sugar                                          21.10                                        22.40

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                                                                  Last                                    Last Week

Nov Soybeans                                         9.58                                        10.44

Dec Corn                                                  3.274                                     3.362     

Dec Wheat                                               4.934                                      5.17

Money flow in soybeans remains negative. Favorable weather has given rise to speculation that US crop yields will be more than ample. Moisture in the key growing regions of the United States has been almost perfect. Technically, November soybeans are attempting to base around $9.50.

 

 

Technically corn is attempting to form a base around $3.11 for December futures.  After the price pressure of harvest has been removed, corn may finally attempt a rally.

 

Wheat continues to remain under pressure. Prices are attempting to stabilize around the psychological level of $5.00 a bushel but the technical sings just aren’t there to make a case for a bottom. Money flow in wheat remains negative.

 

 

                                                                 Support                                         Resistance

Nov Soybeans                                          9.31                                        9.81

Dec Corn                                                3.14                                        3.29

Dec Wheat                                              4.89                                         5.10

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.