OPEC Cuts Global Oil Demand Outlook

04.15.09

Filed 7:45 pm Wednesday      

                                                       Last                                            Last Week   

June Crude                                   52.12                                                52.54

June Heat                                     143.45                                              143.65

June XRB (Blended Gas)            146.33                                              146.76

Crude oil was roughly unchanged over the past five sessions. It did come off in price on Wednesday as the Department of Energy report showed that US stockpiles were at their highest levels in almost 19 years due to a drop in demand. Crude stocks rose by 5.6 million barrels to 366 million barrels last week. It’s the highest level since September of 1990. Against last year at this time, demand for crude oil is 5.2% lower. Currently the market is in a range bound trade with technical considerations  positive and fundamentals negative. Crude oil is up 10% for the year so far. A positive development for the market was a drop in crude stocks at Cushing Oklahoma, the terminal for West Texas intermediate oil, the benchmark for US trading. Also, traders are beginning to roll over positions from May to June crude oil as the May contract comes off the board next week. Gasoline stockpiles dropped by 944,000 barrels to 216 million barrels. Distillates stocks fell by 1.1 7 million barrels to 139.6 million barrels. Refineries operated at 80.4% of capacity down 1.5% from last week. Refineries are operating at such a low level because demand is terrible. OPEC has cut its forecast for global demand this year for the eighth consecutive month because of world wide economic contraction. Industrial production in the US fell for the 14th time over the last 15 months.

 

                                                                Support                                     Resistance

June Crude                                            50.70                                                 55.00  

June  Heat                                              137.00                                             149.00

June Gas                                                143.00                                              152.00

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METALS

                                                                     Last                                              Last Week     

June Gold                                                   891.20                                         882.70

May Silver                                                   12.74                                           12.26                 

July Platinum                                            1221.00                                       1177.70            

Gold was steady over the last five trading sessions. Some are looking for gold to fall  in price due to speculation that inflation will be contained. The rebound in the stock market has removed some buyers from the gold market. Also, the dollar has been relatively strong against major foreign currencies, a gold market negative. The drop in the consumer price index was a gold market negative. Technically, gold is still trapped in a trading channel. Silver remains technically positive, possibly catching a draft from the rally in copper. After all, silver is a by product of copper mining. A drop in retail sales of 1.1% was a gold market negative.

 

                                                             Support                                      Resistance

June Gold                                            881.00                                         905.50  

May Silver                                            12.45                                           12.94         

July Plat                                              1187.00                                        1266.00       

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SOFTS

                                                                       Last                                     Last Week

May Coffee                                                115.70                                 118.15

May Sugar                                                  13.14                               12.38

 

 

                                                           Support                                   Resistance

May Coffee                                     112.40                                          117.50          

May Sugar                                       12.50                                            13.60                                          

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                                                                  Last                                    Last Week

 May Soybeans                                      10.35                                    10.08

May Corn                                                3.844                                   3.964

May Wheat                                            5.152                                    5.325

Corn continues to drop in price as stable oil prices and a stronger dollar suggested reduced demand. Key growing areas have been wet and few acres have been planted. Weather patterns suggest a period of dry weather and this would speed the spring planting.

 

Soybeans have been strong. The reason for the rally in soybeans is a combination of declining production in Argentina and the political situation there as well. Also, there is been stronger than average buying of soybeans from China. Exports from Sales in Argentina are limited due to a dispute with the government over the export tax.

Money flow in the wheat continues to be negative. Dollar strength is a negative as is the continuing contraction in world economies. Wheat has been lower six of the last seven trading sessions. Increased shipments of wheat from Russia to Egypt  is a negative for price. Previously the trade had thought that Egypt had banned imports of Russian wheat. The fact remains that Black Sea wheat is the lowest priced wheat on the market. This will hurt US exports. Russia is the third largest shipper of wheat in the world behind the United States and Canada. It's also believed that Russia has understated its actual wheat production in an effort to support prices.

 

 

                                                               Support                                    Resistance

May Soybeans                                       10.00                                            10.60     

May Corn                                               3.75                                            4.00    

May Wheat                                            5.05                                             5.39    

Chuck Kespert

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.