WEEKLY FUTURES REPORT
02.09.11
Filed 7:45 pm
Last Last Week 2.03
Mar Crude 86.92 90.68
Mar Heat 276.90 276.30
Mar Gas (Blended) 253.05 250.34
Crude oil fell in price on Wednesday in response to a Department of
Energy report showing weekly supply and demand figures. According
to the report, US crude stockpiles increased for a fourth consecutive
week. Crude oil increased by 1.9 million barrels last week. The trade
was looking for an increase of 2 million barrels. Inventories for gasoline
and heating oil also increased. Crude traded to its lowest level since
January 27. Year on year crude oil is 18% higher. Stockpiles at Cushing
Oklahoma, the land locked hub for West Texas intermediate oil,
continue to increase. At the end of January they were at their highest
levels since the Department of Energy started keeping track of levels in
2004. Because Cushing, Oklahoma is land locked there has been a
widespread between West Texas intermediate and London-based oil.
Gasoline stocks were 4.6 million barrels higher to 241 million barrels.
This is the highest level since 1990. The trade was looking for an
increase of 2.6 million barrels. Market observers say that when refiners
start cutting back on producing gasoline this will eventually pressure
crude prices lower. The spread between Brent crude and West Texas
intermediate is at its highest level ever. Money flow continues to be
negative in crude oil but positive for the products. You can tell this
pretty easily just by looking at the charts below. If crude does not
double bottom at $85 a barrel, the chart will flip and produce a
downside target of 77.38. Actually, possibly the only thing holding crude
up at these levels is the strength of the products.
Support Resistance
Mar Crude 84.70 89.20
Mar Heat 264.00 279.00
Mar Gas 239.00 256.50
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METALS
Last Last Week
April Gold 1364.30 1353.20
March Silver 30.215 28.55
Apr Platinum 1861.80 1842.70
Gold continued to grind its way higher. The dollar has been very mixed
over the past week and has not been that much of an influence in gold
trading. One negative feature to the complex was the increase by China
of its interest rates to try and stem inflationary pressures there. As has
been mentioned before, gold is a non-interest-rate bearing asset. When
interest rates back up in in the US and China raises rates to counteract
inflationary pressures, money flows out of gold and into debt to take
advantage of that edge which gold cannot provide. Stocks have also
proven to be some competition for gold. The last rush higher in gold was
a picture perfect one with three components driving the price higher.
The first was the withdrawal of the small speculator from the market
which could be seen by the cash withdrawals from ETFs. The second
feature was an increase on the long side of commercial interests. The
third aspect to set up the last rally was a decline in open interest. This
set the stage for a sharp, brisk rally from the 1300 area to where we are
now. Gold looks temporarily overbought and needs to work off some of
its excesses. The same can be said for silver. Copper has been on the
defensive over the past couple of sessions because of the higher rates in
China. Still and all, gold should continue to be bought on corrections.
Support Resistance
April Gold 1340.70 1380.30
March Silver 28.87 31.40
Apr Plat 1827.00 1885.00
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SOFTS
Last Last Week
March Coffee 253.60 251.35
March Sugar 31.50 32.04
Support Resistance
March Coffee 244.00 259.00
March Sugar 29.22 37.70
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Last Last Week
March Soybeans 14.51 14.42
March Corn 6.98 6.67
March Wheat 8.86 8.644
Wednesday was a massively positive day for the grain complex. Corn
wheat and soybeans all traded to their best levels since 2008 after a US
Department of Agriculture report showed that inventories are not as
great as previously thought. The USDA went on to say that crop
supplies should slump 2.2% this year. Russia has been experiencing
droughts and there has been a recent spate of adverse weather in the
United States Canada and Australia. These weather conditions are all
working to reduce crop size and quality. Corn is higher by 95% year on
year. Higher prices will have some beneficial aspects, however. The
value of farmland has increased appreciably and the wealth of farmers
is also improving. High prices should eventually impact demand by
reducing it. Grains should continue to be bought on corrections. In
other words, if it doesn't need fixing don't break it.
Support Resistance
March Soybeans 13.68 14.84
March Corn 6.54 7.04
March Wheat 8.00 8.99
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.