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Gasoline higher by 44% year on year

WEEKLY FUTURES REPORT

04.20.11

Filed 8:45 pm

Last Last Week

June Crude 111.38 109.48

June Heat 323.33 320.45

June Gas (Blended) 324.25 317.49

Crude oil was higher on Wednesday, actually surging the most a month as higher equity markets increased optimism that the economic recovery is accelerating and consequently the industrial off-take of oil will be supportive to prices. Also the dollar was basically weaker against most major foreign currencies. Prices also rallied after the US Department of Energy stated that gasoline supplies and crude oil stockpiles declined for the latest reporting week. Crude oil is 34% higher than last year at this time. Crude stocks declined for the first time in seven weeks, falling by 2.34 million barrels to 357 million barrels. Trade was looking for an increase of 1.3 million barrels. Gasoline was higher yet again as we approach the beginning of the driving season. Gasoline is higher by 44% year on year. Stockpiles declined for the ninth consecutive week. Demand also fell by 1.3% to 9.06 million barrels a day. Supplies in the pipeline also fell. Distillate inventories also fell for the second straight week by 1.7% to 148 million barrels. After the Goldman Sachs call for lower commodity prices, many traders had gravitated to the short side of the market and were burned by Wednesday’s action. Money flow in crude oil remains positive. Gasoline looks like it wants to move to a superior position to heating oil. It has been unseasonably cool in the populous US Northeast. It’s difficult to point to any signs of demand destruction due to higher prices. Expiration of the May Crude contract also exerted upward price pressure.

Support Resistance

June Crude 106.50 115.00

June Heat 313.350 327.00

June Gas 316.50 327.00

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METALS

Last Last Week

June Gold 1502.50 1457.80

May Silver 45.24 40.57

July Platinum 1806.80 1777.20

Metals exploded higher yet again. Dollar weakness on Wednesday was pervasive. Central banks remain on the buy side. Higher energy markets were supportive. With the upcoming observance of Good

Friday and Easter Sunday, the only selling coming into the market is from profit taking. Gold breached and closed above $1500 on Wednesday for a fresh, recent high. S+P downgrading the US economic outlook was a gold market positive. The market is continually focusing on rising inflation risks. As long as short term interest rates in China are well below rates of inflationary, demand from that country will drive gold higher.

Silver continues to be extremely well bid. There seems to be a perfect environment for silver unfolding as Euro Zone credit worries continue, the situation in Libya continues with no clear leader to succeed Khadafy emerging while the Fed remains convinced that inflationary pressures remain transitory when it appears they may not be while corporate profits seem to be better than expected. Even the unemployment picture is improving. Silver is potentially moving into a position to run towards and beyond $50 an ounce. There are so many stories up in the air at this point, Euro Zone debt, Libya, Egypt, Yemen, US debt worries that just enough of the investment world will simply buy metals and wait for days of better clarity.

Support Resistance

June Gold 1488.00 1525.00

May Silver 43.05 47.50

July Plat 1758.00 1850.00

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SOFTS

Last Last Week

July Coffee 294.40 283.70

July Sugar 23.53 23.65

Coffee shook off early week selling pressure and rallied to its best levels since March. Tight stocks are supportive. Last month saw 14 year highs. Good coffee form Columbia and Guatemala continues to be in short supply. Coffee supplies from Indonesia are possibly 25% below year ago levels. Vietnamese producers are probably holding back product from the market waiting for higher prices. As long as the dollar remains weak look for higher prices and for the market to surpass the highs of March.

Sugar continued to break lower, to new lows as measured against the past few weeks. The market is oversold but with reason. Sugar may come back to the fold of higher commodity prices in general that remains to be seen. Higher gasoline prices will put pressure on ethanol. With higher prices for ethanol, cane production will be diverted. Current demand levels remain questionable, however. If India allows sugar exports, this would be viewed negatively. Cuba announced that it met its production goals for the first time in 20 years.

Support Resistance

July Coffee 275.00 300.00

July Sugar 2300 2450

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Last Last Week

July Soybeans 13.692 13.45

July Corn 7.404 7.61

July Wheat 8.206 7.88

Soybeans continue to be caught between uncertain weather conditions going into the planting season and negative demand from China and India. Strength in Corn helped lift soybeans. The idea that demand from China will be week and news of canceled cargoes originally going from South America to China were seen as negative factors. Chinese ending stocks in soybeans may be at 6.5 million tons compared with the usual 3.5 million to 5 million tons. Spread activity seems to be favoring November futures against July.

Continued wet weather for the next week will be supportive for corn prices. This should delay planting. Ethanol producers are seeing positive profit margins so corn is being diverted to ethanol production. The cattle on feed report Thursday afternoon may indicate an increase for corn demand.

A weaker dollar plus delayed plantings for wheat will support the market. A tightening supply outlook for hard red winter wheat is positive. Russia has indicated that they will not lift their export ban on wheat until at least July. This is a very supportive feature. On the other hand, forecasts for normal monsoons in India and a record harvest will exert downward pressure on prices. Money flow in wheat is positive.

Support Resistance

July Soybeans 13.41 14.02

July Corn 7.25 7.82

July Wheat 8.00 8.50

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.