Crude oil futures seems to be caught in a range trade due to several factors

Weekly Futures Report

11.18.09

Filed Wednesday 2:30 pm

ALL CHARTS THIS WEEK ARE Daily Bars    

                                                            Last                               Last Week   

Jan Crude                                         80.10                                79.87  

Jan Heat                                            209.43                             209.03

Jan XRB (Blended Gas)                  204.03                            201.80

For the latest reporting week, the Department of Energy stated that crude stocks fell by 887,000 barrels versus an expectation by the trade for of an increase of 300,000 barrels. Gasoline stocks were down by 1.75 million barrels versus an expectation of a drawdown of 25,000 barrels. Distillates stocks including heating oil were down 328,000 barrels, while   traders had been looking for a decline of 850,000 barrels. These numbers were basically in line with numbers released by the American Petroleum Institute last night. The API stated that crude stocks had fallen by 4.37 million barrels. Some believe that the recent numbers suggest an improvement in demand. Others pointed to last week's weather event, Hurricane Ida and the closing of the Houston shipping channel which disrupted supplies. The hurricane had the effect of shutting down about 43% of oil output in the Gulf of Mexico. The Louisiana offshore oil port used by tankers that are too large to dock at US harbors was closed for 3 days because of the weather. Because of this traders are looking for increases in supplies next week. According to MasterCard, gasoline consumption in the United States rose for the first time in three weeks, increasing by 1.4% for the first weekly increase its October 23. The next regularly scheduled OPEC meeting will occur next month in Angola. It's widely believed that OPEC members will not officially boost output at this meeting because demand is still too weak. China also stated that they see no signs of a big increase in fuel demand next year. China is the world's second-largest oil consumer. Because of all these factors crude oil seems to be caught in a range trade. December crude comes off the board on the 20th of the month.

 

                                                              Support                            Resistance

Jan Crude                                             78.00                            81.50        

Jan Heat                                               203.70                         214.00

Jan Gas                                                 198.00                              208.00                                                             

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METALS

                                                            Last                             Last Week     

Feb Gold                                            1145.50                          1119.00             

Mar Silver                                          18.57                               17.61              

Jan Platinum                                      1444.90                         1372.00

Gold continued to climb to new record levels as demand continued to grow amongst investors. Gold continues to trade as the anti-currency. As some say, gold as an asset isn't someone else's liability. The dollar remained fundamentally weak based on interest rates. Gold is up 30% for the year. The dollar has fallen about 7.3% so far this year. Actually, the dollar has been fairly stable over the past 10 sessions. As a basket, the dollar index is at the same level as it was on October 21^st. Gold's advance has largely been due to its own momentum and its own merits. Universal demand for gold from governments, pension funds and investors has allowed gold to rally for the ninth straight year. With interest rates near zero gold really doesn't have any competition from interest-rate bearing assets. A nonvoting member of the Federal Reserve Bank of St. Louis on Wednesday said that US interest rates may not rise until 2012. US interest rates are between zero and .25 while ECB interest rates are 1% of the Bank of England's at half of 1%. The IMF continues to sell gold to countries such as Mauritius and India. The latest gold run is not a reflection of inflationary pressures as US unemployment exceeds 10%. Money flow in all the metals remains positive.

                                                    Support                                      Resistance

Feb Gold                                   1123.00                                 1155.00                                                         

Mar Silver                                   18.00                                            19.00                      

Jan Plat                                     1422.00                                       1484.00    

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SOFTS

                                                                Last                          Last Week

Mar Coffee                                         140.75                              135.80

Mar Sugar                                           23.21                               22.67

The world coffee supply may drop by 3.2% for the near-term as lack of rainfall reduced harvests in Brazil Vietnam and Columbia. Trade sources believe that global supply may fall to about 124 million bags down for previous estimate of 128 million bags. Coffee has rallied 23% this year. The perception of a weak dollar also supported coffee. Emerging markets will probably lead to an increase in demand while supply is diminished.

Sugar continued to trade higher as there was speculation that more rainfall in key growing areas may disrupt harvesting.  The International Sugar Organization dropped its crop estimate for Brazil by 3.3% after greater than expected rainfall in September. Money flow in sugar is negative, however.

                                                Support                                  Resistance

Mar Coffee                                  136.00                                    145.00        

Mar Sugar                                    22.60                                      23.63   

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

                                                                  Last                            Last Week

 Jan Soybeans                                        10.27                               9.73.2

Mar Corn                                                4.136                              4.076 

Mar Wheat                                             5.88                                 5.502

Con advanced to its best price levels since June and soybeans rallied as well as a decline in the dollar supplied enough buyers to take the market higher. A statement by a nonvoting Federal Reserve regional president that suggested that policymakers may not have to raise interest rates until early 2012 helped to undermine the dollar on Wednesday and gave an initial  boost to commodity prices across the board. In early trade corn was up 1.5% while soybeans rose by 1.5%. Open interest or the number of outstanding corn contracts yet to be sold or delivered in corn futures is the largest in history at over 1 million contracts. Money supply in soybeans could flip to positive on a close above 1027 on Wednesday. Money supply in corn is also positive.

Wheat futures were higher for the seventh consecutive session and were brushing up against a four-month high on the idea that US planting will be delayed because of unusually wet weather. Key growing areas in the Midwest have received three times the normal amount of precipitation over the last 60 days. Wheat futures are back to the highs seen in early June. Money supply in wheat is positive.

 

                                                                Support                          Resistance

Jan Soybeans                                          9.92                                   10.50

Mar Corn                                                4.13                                    4.23

Mar Wheat                                              5.70                                    6.10

 

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.