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US Crude stockpiles increased for a 4th consecutive week

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

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

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

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

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

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

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.