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
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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
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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
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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.