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Crude Oil rallies to a new high and sales of new homes in the US more than forecasted

WEEKLY FUTURES REPORT

01.26.11

Filed 7:30 pm

Last Last Week 01.13

Mar Crude 87.62 91.77

Mar Heat 268.12 266.08

Mar Gas (Blended) 246.07 249.61

Oil rallied from an eight week low as the Federal Reserve at its Federal

Open Market Committee meeting kept interest rates unchanged. Some

traders thought that the recent correction was overdone and covered

shorts in front of the Federal Reserve's decision at 2:15 in the afternoon,

New York time. Another positive for the market was the fact that sales

of new homes in the United States rose more than forecast at an increase

of 18%. Also, some traders believe that Chinese demand this year will

increase crude oil demand and boost prices. The technical gauge known

as the relative strength index over a 14 day period was at its lowest level

in five months going into trading today. Another thing to notice is the

week on week change for crude which is nearly 4 dollars lower than last

week at this time while heating oil is two cents higher than last week and

gasoline is over three cents lower. Another fact to this market is the

widening spread between Brent crude traded in London and West

Texas intermediate which trades in New York. It's at or near record

levels with Brent crude trading higher than New York crude. Part of

this is due to the fact that the hub or terminus for West Texas

intermediate is Cushing Oklahoma which of course is landlocked. Some

traders believe that Brent is more indicative of true supply and demand.

Recent inventory numbers compiled by the American Petroleum

Institute indicated that crude stockpiles had risen by 2.12 million

barrels to 342 million barrels for the latest reporting week. They also

reported the gasoline stocks were higher by 1.72 million barrels to 232

million barrels. Gasoline stocks are at their highest levels since last

February. As the trading day came into the close, the dollar weakened

and this helped to lift crude higher as well. Money flow for crude oil

remains negative while money flow for heating oil remains positive.

Support Resistance

Mar Crude 85.00 88.50

Mar Heat 255.00 268.00

Mar Gas 232.50 246.00

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

METALS

Last Last Week

February Gold 1345.0 1369.40

March Silver 27.565 28.68

Apr Platinum 1813.6 1835.00

Gold and silver both fell in price over the past week. Part of the

problem with the reason for the decline was the fear that the Chinese

would raise short-term interest rates to curb inflationary pressures. As

mentioned before, gold has few competitors but one of them is interest

rates. Should interest rates back up or be perceived to be entering into a

cycle of higher rates, this would negatively affect gold. Also, there has

been a reduction in asset backed gold ETFs. Gold did rebound on the

inaction by the Federal Reserve regarding interest rates. Gold continues

to be a hedge against European debt concerns. Money flow for gold

remains positive but remains negative for silver.

Support Resistance

February Gold 1315.00 1346.50

March Silver 26.30 27.30

Apr Plat 1756.00 1835.00

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

SOFTS

Last Last Week

March Coffee 237.50 232.50

March Sugar 33.13 31.18

Coffee was up 7.4 cents or 3.2% on Wednesday after prices had fallen

3.8% at the beginning of the week. In the cash market, Kenya's

benchmark blend was down 13% week on week. Buyers stepped away

from the market believing that demand was good but ultimately wasn’t

strong enough to blindly drive prices ever higher. The quality of the

coffee was rated as good. Fundamentally, Kenya’s coffee production

year on year basis September may be down 27% due to difficult

growing conditions.

Sugar rallied sharply on Wednesday along with other commodities as

the Federal Reserve continues to suggest that the cost of money will be

negligible. As long as the Federal Reserve continues to keep interest

rates at inflammatory levels then commodities such as sugar should

benefit. Cash traders say demand from Russia is very good. Russia is

reducing its import tax on sugar and this is a positive for the market

Support Resistance

March Coffee 230.00 245.00

March Sugar 30.70 33.90

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

Last Last Week

March Soybeans 13.854 14.114

March Corn 6.576 6.412

March Wheat 8.564 7.972

Wheat rallied sharply on Wednesday along with soybeans and corn as

export business was brisk. The United Nations continues to advise

exporting countries not to restrict shipments and help to prevent

disruptions in world grain markets. Countries in the Middle East such

as Egypt, Algeria and Morocco are very tense and they are worried

about food supplies and the possibility that food shortages could set off

riots. Other sovereign nations are stockpiling grains and this will

continue to support demand for grains. Wheat soybeans and corn all

enjoyed double-digit digit gains on the day.

Support Resistance

March Soybeans 13.46 14.22

March Corn 6.37 6.62

March Wheat 8.26 8.75

Chuck Kespert from 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.