WEEKLY FUTURES REPORT
03.02.11
Filed 6:35 pm
Apologies for the hiatus as we moved offices last week to 75 Broad Street, one block south of the NYSE. Please visit if you can. This also partially explains the truncated version of this report.
Last Last Week
Apr Crude 102.43 97.28
Apr Heat 306.20 291.66
Apr Gas (Blended) 302.50 286.77
Crude oil traded to its best closing level in over two years as concern about the political instability of Libya preoccupied traders and grabbed headlines world-wide. Market observers believe that Libya’s oil production has been reduced by 50% as foreign oil workers have fled the country to avoid violence. Apparently, revolutionary forces opposed to Qaddafi were ready to confront forces loyal to the dictator. Libya has the largest proven oil reserves in North Africa. Political fears spread to Saudi Arabia as their benchmark stock index fell to its lowest level in two years. Although the supply for West Texas Intermediate benchmark crude in Cushing, Oklahoma more than meets demand, there is still considerable panic buying that sweeps through the market on an almost hourly basis. Momentum traders have helped to exacerbate price levels as well. Prices are now higher by 25% than levels seen last year at this time. Brent crude, more physically proximate to the Middle East, still maintains its premium over the West Texas intermediate, trading nearly $16 dollars a barrel higher. Given their differences, that one terminus is land-locked and the other isn’t, the two prices need not converge any time soon. Unless you have a great deal of trading experience and deep pockets, this spread should be avoided. On Tuesday, the American Petroleum Institute stated that crude stocks were lower by 1.1 million barrels for the latest reporting week. The International Energy Agency believes that maybe as much as 1 million barrels a day has been lost due to the internal conflict in Libya. There has also been rioting in Teheran. There have been regime changes in Tunisia and Egypt. In a preemptive action, it’s expected that the Saudis will attempt to defuse political tensions in that country by releasing reserves and this may drop prices below $100 a barrel. The Saudis are on record as saying that they are ready to satisfy incremental demand changes due to lapses in Libyan production. There may be problems with the quality of the offered crude however. The IEA is also sitting on a vast emergency reserve of oil and this could be made available at any time resulting in another sort of price shock. Money flow in crude remains positive. Money flow in Heating Oil is negative as it is in Gasoline.
Support Resistance
Apr Crude 97.00 103.41
Apr Heat 288.00 312.00
Apr Gas 284.00 309.00
**********************************************************
METALS
Last Last Week
April Gold 1435.70 1414.00
May Silver 34.645 33.304
Apr Platinum 1852.00 1776.70
Gold moved higher over the last five trading sessions as investors sought out a hedge against uncertainty in the Middle East. Silver pushed to its best levels since 1980. The silver market frequently trades as if there’s a short squeeze in place. With interest rates still at artificially low levels and the Federal Reserve apparently not seriously concerned with commodity price inflation, the metals market has been drawing increasing interest from a broad range of investors and speculators. There is a degree of counterbalance to this however as higher oil prices will hurt corporate profits, slow economic expansion and cast a chill on retail spending by the consumer. Gasoline at the pump in Europe is brushing up against $8.00 a gallon. Gold is up 26% over year ago levels. At this juncture, it doesn’t seem as though interest rates are ready to back up substantially enough to give gold a challenge for investment flows.
Support Resistance
April Gold 1399.70 1451.00
May Silver 33.38 35.24
Apr Plat 1818.50 1873.00
******************************************
SOFTS
Last Last Week
May Coffee 269.50 269.45
May Sugar 30.38 31.50
Some technicians are looking for a fall by as much as 24% in sugar in 60 days based on a traditional head and shoulders formation. Fundamentally, a unit of JP Morgan Chase took delivery of enough sugar to meet 9% of US consumption needs.
Support Resistance
May Coffee 269.00 278.00
May Sugar 28.50 31.10
********************************************
Last Last Week
May Soybeans 13.942 13.314
May Corn 7.214 7.022
May Wheat 8.112 7.982
The forecast for continuing rains in Brazil helped to support soybeans. Corn was under selling pressure on profit taking. US corn stockpiles will total 675 million bushels, down 60% form a year earlier. Soybean reserves are to be lower by 4.2 percent of estimated annual demand. Until new crop is successfully in the ground, look for continued volatility and high seas.
Support Resistance
May Soybeans 13.45 14.25
May Corn 7.05 7.43
May Wheat 7.84 8.36
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.