Crude came under light profit taking on Wednesday after hitting 26 month high

12.29.10 Filed Wednesday 5:40 pm

ALL CHARTS THIS WEEK ARE Hourly Bars

Last Last Week 12.22

Feb Crude 91.00 90.62

Feb Heat 252.95 254.15

Feb Gas (Blended) 239.74 240.74

Crude oil came under light profit taking on Wednesday after trading at

a 26 month high. Profit taking was inspired by the idea that inventories

will build during the month of January and demand will diminish. A

decline in US consumer confidence also inspired some profit taking.

There’s also the belief that stockpiles will shrink over the near term as

refiners delay deliveries into 2011 to avoid end of year taxes on oil in

storage. Observers believe that after the New Year, inventories will

begin to build and gasoline demand will fade. The Department of

Energy report was delayed for a day due to holiday considerations.

Inventories are expected to have declined for a fourth consecutive week.

Consumer confidence is weak as unemployment remains high and the

housing market remains dormant. Money flow for crude oil remains

positive. Thin trading conditions going into year end has exaggerated

valuations.

Support Resistance

Feb Crude 90.50 92.22

Feb Heat 251.50 255.00

Feb Gas 237.00 243.00

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METALS

Last Last Week

February Gold 1411.90 1385.60

March Silver 30.60 29.25

Jan Platinum 1759.60 1723.60

Gold continued to rally as European debt concerns remained a concern

and the dollar fell in value. Gold’s previous high of 1432.50 was within

reach. Priced in Euros, gold is trading at a new high. Concern over the

viability of the single currency has led to confidence in gold buying.

Gold is up 29% for the year and is enjoying 10 consecutive annual

gains. Even though short term rates have backed up, gold has managed

to maintain its rally. At the same time, silver was approaching levels not

seen since 1980. Copper was also at record highs. Even though China

seems intent on raising short term rates to stem inflationary pressures,

the markets either don’t believe in an economic pause in the Pac Rim or

simply have chosen to ignore this factor. Money flow in gold and silver

remains positive. Copper stockpiles continue to increase, a negative.

Support Resistance

February Gold 1375.00 1423.00

March Silver 28.90 31.08

Jan Plat 1698.00 1735.00

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SOFTS

Last Last Week

March Coffee 239.65 230.20

March Sugar 33.83 33.13

Sugar retreated from a 30 year high as traders took profits. Year end

book squaring was a feature. Also, there’s the belief that higher prices

will eventually curb demand. Rains in Australia in key growing regions

put upward pressure on prices. Coffee hit a 13 year high last week.

Support Resistance

March Coffee 214.80 244.35

March Sugar 31.35 35.35

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Last Last Week

March Soybeans 13.77 13.396

March Corn 6.24 6.09

March Wheat 7.992 7.834

Soybeans backed off in price on Wednesday after profit taking came

into the market after making a 28 month high. Soybeans had been up

12% for the month and corn had rallied 15% as hot, dry weather

threatened Argentinean crops. Yesterday’s high as $13.96 was the best

price traded since August 2008. Rains are expected in the key growing

regions of Argentina but they may be too late to relieve the stress to the

corn market.

Support Resistance

March Soybeans 12.85 14.02

March Corn 6.08 6.31

March Wheat 7.70 8.15

Chuck Kespert from NY/NY