Re-nomination of Chairman Bernanke to the Federal Reserve casting positive feature to the market

Weekly Futures Report

08.26.09

Filed 3:14 Wednesday     

                                                            Last                                            Last Week   

Oct Crude                                        71.33                                              73.57

Oct Heat                                           187.41                                           194.46

Oct XRB (Blended Gas)                  184.43                                          190.51

Crude oil was lower by more than two dollars a barrel on Tuesday as the market ran into a wall of resistance at $75. The market had rallied up to this level in part due to a better-than-expected reading of confidence from US consumers. Housing market stability was also a positive feature. New home sales jumped 9.6% for the latest reporting month. Of course, crude oil continues to not trade according to traditional supply and demand considerations. Many market observers believe that if that were the case crude oil would be trading around $55 a barrel. A continued rally in the US stock market was also a positive for the market. There was early selling on Wednesday in front of the release of the US Department of Energy report regarding supply and demand. Also the dollar was stronger against most major foreign currencies, notably the British Pound. A negative for the market was the idea that China that increase lending demands. If economic activity in China slows it will have a negative impact on the demand side for oil. Another positive feature to the market is the beginning of the hurricane season. Another positive for the market was the re-nomination of Chairman Bernanke to the Federal Reserve by the president.  Iraq is looking to maintain current production levels and is recommending that to other OPEC members. Volume has been contracting as well with yesterday’s trade 30% lower than the average over the past three months.

Crude oil initially had a rebound from the lows on the release of the Department of Energy figures regarding supply and demand. Crude oil had a build of 128,000 barrels while traders had been looking for decline of 1.15 billion barrels. Gasoline also had a drawdown of 1.7 million barrels while the trade had been expecting a decline of 1 million barrels. Distillate stocks increased by 767,000 barrels while the trade was looking for an increase of 100,000 barrels. The news inspired a short covering rally of about $.60 in crude oil before prices fell back down towards the lows of the day.

One negative for the market is the fact that the Labor Day holiday in the United States is late this year, occurring on September 7, the date when many children are already back in school.

 

 

                                                           Support                                     Resistance

Oct Crude                                             68.50                                     76.00 

Oct Heat                                               180.00                                              196.50

Oct Gas                                                180.00                                              197.50                                                               

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METALS

                                                                     Last                                              Last Week     

Dec Gold                                                     946.20                                             943.20

Sept Silver                                                   14.29                                              13.815              

Oct Platinum                                               1237.00                                        1240.50

Summer trading conditions prevailed in the gold market as little progress was made on either side of unchanged. Gold was influenced higher by better-than-expected consumer confidence numbers and a higher US stock market while at the same time gold was influenced lower by profit-taking in crude oil and general weakness in the grains. Also, the dollar was generally stronger against major foreign currencies, a metals market negative. Gold was also negatively affected by the idea that China may increase lending requirements which would result in a slowdown in their economy. Platinum inventories remain very high.

One positive for the market was the fact that German business consumer confidence is at a 12 month high.

 

                                                    Support                                      Resistance

Dec Gold                                    935.00                                             961.0                                                      

Sept Silver                                   13.90                                              14.63                       

Oct Plat                                       1230.00                                          1261.00    

                                     *********************************

SOFTS

                                                                       Last                                     Last Week

Sept Coffee                                                  123.10                                     125.45

Oct Sugar                                                     22.40                                        22.67

Coffee continued to fall in price over the past five trading sessions. Tightness in Colombian stocks seems to be easing. Coffee is lower by 4.2% for the month. Then make Colombia said that coffee production may drop to 10 million bags down from 11.5 million bags and this inspired a rally. Open interest continues to decline another sign of long liquidation.

 

Sugar continued to trade in a broadening top formation as prices have not made new highs since the first week in August.

                                                          Support                                   Resistance

Sept Coffee                                                    118.50                                     123.00

Oct Sugar                                          21.20                                       22.50

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                                                                  Last                                    Last Week

Nov Soybeans                                          9.964                                        9.58

Dec Corn                                                   3.264                                      3.274     

Dec Wheat                                                5.066                                      4.934

Corn was under selling pressure on Tuesday after the US Department of Agriculture said the crop conditions improved last week and that yields should be higher than initially anticipated. 70% of the crop is in good or excellent condition compared to 64% one year ago. Average yields may 162 1/2 bushels per acre against a previous forecast of 161 bushels an acre. Crop conditions continue to improve even in August which is a very positive sign for yields.

 

 Wheat was higher on early trading on Wednesday on the idea that global supplies may be smaller than expected. Australia, the fourth-largest exporter of wheat, is seeing its production curtailed due to El Niño. Australia is expecting less than normal rainfall in key growing areas. The country usually produces 19 to 20 million tons but if El Niño persists, that production could fall to 9 to 12 million tons.

 

Money flow in soybeans continues to be negative. Soybean production is expected to reach a record of 3.19 billion bushels up 8.1 percent from last year's 2.95 billion bushels. The current crop is about 77 million acres, the largest ever.

 

                                                                 Support                                         Resistance

Nov Soybeans                                          9.73                                               10.29

Dec Corn                                                3.14                                                 3.43

Dec Wheat                                              4.80                                                  5.25

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.