The Department of Energy states that crude stocks fell by 3.4 million barrels against an expected decline of 2 million barrels

Weekly Futures Report

12.16.09

Filed Wednesday 3:10 pm

ALL CHARTS THIS WEEK ARE Daily Bars

Last Last Week

Feb Crude 74.33 72.55

Feb Heat 198.76 193.65

Feb XRB (Blended Gas) 190.30 188.27

For the latest reporting week, the Department of Energy stated that

crude stocks fell by 3.4 million barrels against an expected decline of 2

million barrels. Gasoline stocks which had been expected to rise 1.2

million barrels only increased by 879,000 barrels. Distillate stocks

declined by 3 million barrels against an expected decline of 500,000

barrels. On Tuesday night, the American Petroleum Institute had a far

different reading on the weekly supply and demand statistics for crude

and its products showing a build in crude stocks and an increase in

gasoline stocks leaving that product, in terms of supply, at its highest

levels since April. The market was geared up to rally however as

housing starts and building permits both came in better than expected

and there was the anticipation that the Federal Reserve would leave

short-term interest rates unchanged at the conclusion of its FOMC

meeting at 2:15 PM on Wednesday. It was also expected that the

language in the Federal Reserve communicate would suggest that the

US economy is gradually improving and that could lead to better offtake

of crude oil and its products.

Support Resistance

Feb Crude 69.50 76.00

Feb Heat 187.50 203.50

Feb Gas 180.00 197.50

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METALS

Last Last Week

Feb Gold 1135.2 1120.90

Mar Silver 17.685 17.18

April Platinum 1460.0 1413.40

Metals rallied for the majority of Wednesday as it was widely believed

that the Federal Reserve would leave short-term rates unchanged at its

recently concluded FOMC meeting. In its communiqué the Federal

Reserve did say that they would leave short-term interest rates

unchanged at very low rates for a continued, protracted period of time.

On this news, gold punched higher to 1142.50 basis February futures

then fell back on profit-taking as the dollar regained some of its lost

strength. The Euro Currency managed to trade to 145.88 before trading

back to the 145 even handle. Stocks also came under profit taking in the

wake of the announcement. Metals also rallied based on better prices

for crude oil and a favorable report from the Department of Energy

regarding supply and demand. Even with higher prices for metals on

Wednesday, the dollar should strengthen into year end just based on

year-end banking operations and repatriation of capital. There should

also be some year-end profit taking on gold which has been up about

27% for the year.

Support Resistance

Feb Gold 1095.00 1153.00

Mar Silver 16.55 18.22

April Plat 140400 488.00

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SOFTS

Last Last Week

Mar Coffee 148.10 141.65

Mar Sugar 26.03 22.15

Coffee continued to rally as production in Brazil, the world's largest

producer, should be lower than the 55 million bags previously

estimated. Greater than expected rainfall will cause a problem with the

ripening of coffee beans next year. The initial estimate of 55 million

bags is being downgraded to 50 million bags for next year. Brazilian

growers expect a hard time with harvesting. Money flow in coffee

remains positive.

Money flow sugar also remains positive. India has not been a buyer of

sugar over the last 45 days as prices have s finally hurt consumption.

Sugar is being stockpiled at ports and companies are running out of

room to store it. Sugar has nearly doubled in price this year. Prices are

at a 28 year high. A stronger dollar may impede the advance of sugar in

the first part of 2010.

Support Resistance

Mar Coffee 139.50 151.50

Mar Sugar 22.50 27.00

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

Last Last Week

Mar Soybeans 10.67 10.376

Mar Corn 4.102 3.834

Mar Wheat 5.372 5.352

Soybeans rallied to a two-week high as China continued to increase

purchases from the United States, the world largest grower and

exporter. Chinese demand continues to drive this market. Brazil and

Australia, due to severe drought conditions, saw their production

decrease over the past year while exports for US soybeans increased by

53%.

Money flow in wheat is positive. The market did fall back on

Wednesday as a stronger dollar could hurt export prospects but with

the release of the FOMC communiqué, prices rebounded in the closing

seconds. The Australian wheat crop is currently being harvested and

finding its way into the marketplace and that's putting somewhat of a

lid on an advance at this point.

Money flow in corn remains positive. Slowing overseas demand however

may increase US stockpiles. Corn for export last week came in around

28.1 million bushels, down 10% from the same time last year. Many in

the trade believe it's only a matter of time before the USDA will cut its

export estimations for corn.

Support Resistance

Mar Soybeans 10.235 10.90

Mar Corn 3.86 4.23

Mar Wheat 5.10 5.75

Chuck Kespert

NY/NY