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Crude falls in price for the second consecutive day

WEEKLY FUTURES REPORT

03.09.11

Filed 6:35 pm

Last Last Week

Apr Crude 104.48 102.43

Apr Heat 307.27 306.20

Apr Gas (Blended) 302.70 302.50

Crude oil fell in price for the second consecutive day in trading on the

New York Mercantile Exchange as supplies at Cushing, Oklahoma the

hub for the benchmark West Texas intermediate crude oil continued to

increase. According to the Department of Energy, crude stocks rose by

1.69 million barrels to 40.3 million barrels for the latest reporting week.

Crude stocks at Cushing are at their highest levels since the Department

of Energy has been tracking them since 2004. At the same time, Brent

crude oil traded higher as violence in Libya increased. Crude oil in New

York was lower by $.64. The new recent high for crude oil was $106 .95,

the best level in two years. Crude prices are up 28% from last year at

this time. Brent oil traded up 2.5% $115.94 a barrel. Brent is basically

trading at a $12 premium to West Texas intermediate. The widest

spread between the two was reached on February 21 at $19.54. Last

year the average differential was $.76. Overall crude stocks in the US

rose by 2.5 million barrels to 348.9 million barrels. The trade was

looking for an increase of 1 million barrels. Gas stocks were lower by

5.94 million barrels to 229.2 million barrels. Gasoline prices have never

been this high at this particular time of year. The trade was looking for

a drop of 1.5 million barrels. Distillates stocks fell by 3.98 million

barrels 255.2 million barrels, the lowest level since last June. Weather in

the Northeast United States remains colder than normal.

News out of Libya was difficult to confirm. Allegedly, Qaddafi sent

warplanes to bomb the country’s largest refinery. At the same time, Al

Jazeera television blamed the damage on rebel forces. Libya is Africa’s

third largest crude producer and sits on the largest reserves in the

continent. Only Nigeria and Angola out produce Libya. The fear that

violence may spread to other countries remains real. The situation in

Libya shows no sign of conclusion. 50% or more of foreign oil workers

have left the country. The market remains highly sensitive to the latest

news story. Saudi Arabia has stated that they will ramp up production

to make good on any shortfall caused by recent events. OPEC says that

there is no need for producing countries to meet as the there is no

shortage of supply. The most likely outcome in Libya is that Qaddafi

will eventually seek asylum as his ability to be an effective dictator has

all been undermined by his recent actions. The problem is that there is

no clear succession of power. Long-term traders are using five-minute

charts.

Support Resistance

Apr Crude 102.25 107.10

Apr Heat 293.30 311.00

Apr Gas 288.50 305.00

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

METALS

Last Last Week

April Gold 1431.80 1435.70

May Silver 36.41 34.65

Apr Platinum 1799.60 1852.00

Gold and silver continue to be well bid as tensions in Libya continued

and the price of oil remains persistently high. Silver especially has found

safe haven buying. Gold and silver are being treated as insurance

policies as a hedge against fear. The consensus continues to believe that

US monetary policy will eventually be inflationary. There is also buying

of the metals in front of a scheduled March 11 protest in Saudi Arabia.

At the same time there is the belief that foreign central-banks may

increase short-term interest rates to stem inflationary pressures. This

would be a negative for gold. Silver prices have doubled in the past 12

months. At the same time the industrial metals such as platinum and

copper have been sold off sharply indicating a probable cooling down

for emerging markets. Foreign exchange trading has had little sway on

metals prices recently.

Money flow for gold and silver both remain positive.

 

Support Resistance

April Gold 1415.70 1443.00

May Silver 34.85 36.95

Apr Plat 1778.00 1833.00

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

SOFTS

Last Last Week

May Coffee 294.85 269.50

May Sugar 30.42 30.38

Coffee surged to its highest price since May of 1997 on the idea that

global supplies cannot satisfy global demand. The International Coffee

Organization said that the supply demand ratio is precarious. The

amount of good coffee just isn’t enough to satisfy inflexible demand.

Inventories for coffee in the warehouses of exporting nations are at 40

year lows. World crops have declined while the price of coffee has more

than doubled over the past year. Trade sources expect prices to continue

their upward bias into June on supply tightness in the fear of supply

disruptions. After June, prices should moderate as coffee supplies start

to build a surplus as long as the weather cooperates. Guatemala reports

that weather is hurting their coffee crop. Guatemala is expecting the

third consecutive year of a difficult harvesting season due to weather,

problems with exporters and the outright hijacking of transport trucks.

Commodity funds have moved out of sugar and into other commodities

resulting in selling pressure.

Support Resistance

May Coffee 260.00 300.00

May Sugar 27.56 31.92

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

Last Last Week

May Soybeans 13.49 13.942

May Corn 7.01 7.214

May Wheat 7.586 8.112

As for the grains, wheat has come under significant selling pressure

ahead today’s report regarding world ending stocks for wheat. The

report will be released at 830 in the morning. The market will also learn

at that time US ending stocks for corn and soybeans as well as cotton.

Wheat is now trading at an 11 week low on the speculation that rain and

snow in the United States Great Plains will boost yields for crops just

now emerging from dormancy. Soybeans were also were lower on the

idea that a larger global crop will satisfy demand and that rain in South

America is improving the prospects for crops. Concern that global

supplies are inadequate is fading. Corn dropped for the fourth straight

session. Export sales for grains and soybeans and soybean products are

expected to have risen for the week ending March 3 from a year earlier.

In a related note, supertanker owners are coping with extremely high

fuel costs by sailing ships at the slowest speeds possible in at least the

last three years while at the same time reducing supplies on board and

raising rates. The technical break in wheat is severe.

Support Resistance

May Soybeans 13.00 14.05

May Corn 6.89 7.37

May Wheat 7.25 8.12

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.