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Crude trades down to a six-week low over the past five sessions

05.05 Filed Wednesday 7:15 pm

ALL CHARTS THIS WEEK ARE Daily Bars

Last Last Week

June Crude 79.97 83.22

June Heat 218.45 225.42

June Gas (Blended) 221.75 233.30

Crude oil traded down to a six-week low over these past five sessions as

the euro currency dropped against the dollar due to the worsening

situation in Greece. The fear that the situation in Greece might spill

over to other key members of the EU resulting in an economic

slowdown inspired traders to sell oil contracts. The EC traded to its

lowest level since March 2009. Stockpiles of crude oil rose by 2.76

million barrels last week to their highest level since last June according

to the Department of Energy. The market is very concerned with the

Greek crisis and what it might mean in terms of economic expansion or

contraction for Europe over the near future. It’s not easy to see how this

situation will resolve without severe economic dislocations. Previously,

oil had rallied on the expectation that the world wide economic

expansion would continue and demand would improve. Although the oil

spill in the Gulf of Mexico was still ongoing and leaking 5000 barrels a

day, the oil market is more intricately linked to the financial markets

and currently those markets are faced with uncertainty. The increase in

crude oil stocks left supplies at a level that’s 5.4% higher than the fiveyear

average. Traders had been looking for increase of 1 million barrels.

Another negative was the increase of imports of crude oil to 2.8% or

9.95 million barrels a day. Imports are at their highest levels since last

July 24. Fuel imports were 9.9% higher to 3.1 million barrels a day.

Inventories at Cushing, Oklahoma, the hub for the benchmark West

Texas intermediate oil rose 4.9% to 36.2 million gallons, the highest

level since April of 2004. So, in short, the market is awash in oil and

economic prospects are questionable due to the fallout in Europe. The

ultimate chart target projection for oil now looks to be $75.

Support Resistance

June Crude 75.00 83.00

June Heat 210.00 227.00

June Gas 213.00 232.00

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

METALS

Last Last Week

June Gold 1175.50 1171.80

July Silver 17.495 18.135

July Platinum 1649.60 1713.60

Gold was able to maintain its value over the past five sessions while

most commodity markets traded aggressively lower. There was selling

pressure on Tuesday after reaching a new recent high as traders sold

anything and everything to raise cash to cover losses in equity, currency

and other futures markets. The EC dropped to its lowest level since

March of 2009 as increasing concerns about the situation in Greece

weighed heavily on the currency. Technically, the EC now points to 125

to 126 as a downside target and continued dollar strength will pressure

the metals complex. Industrial metals suffered more than gold. The

LME Index yesterday was down 8.2%. Gold is maintaining its bid

because of its “flight to safety” aspect. Gold is continuing to trade as the

anti-currency. It wasn't that long ago that many people were looking at

the EC as being the next reserve currency even displacing the dollar.

Now it seems to be a real possibility that the EC is just fighting to stay

alive.

Support Resistance

June Gold 1150.00 1200.00

July Silver 17.00 18.50

July Plat 1620.00 1721.00

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

SOFTS

Last Last Week

July Coffee 137.25 133.90

July Sugar 14.29 14.86

Sugar fell to its lowest price in over a year as traders adopted the belief

that India, the world's largest consumer of sugar, will cut back on its

imports. India believes that an increase in imports will collapse the price

of domestic sugar for its farmers. To stop imports India might impose a

60% duty tax. Sugar fell to its lowest price since May of 2009. Indian

production of sugar should increase to 24 to 25 million tons up from a

18.5 million tons last year. A stronger dollar also hurt sugar prices.

Coffee surged to three week high due to tightening supplies from Brazil

and Colombia. Coffee stockpiles have dropped 22% for the year so far.

Fundamentals remain positive although investment demand seems to be

lacking at this point.

Support Resistance

July Coffee 132.00 142.00

July Sugar 13.75 14.75

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

Last Last Week

July Soybeans 9.78 9.934

July Corn 3.73 3.640

July Wheat 5.12 4.88

Soybeans fell back in price over the past five sessions as concerns over

the Greek debt crisis mounted. A stronger dollar is negative for soybean

and soybean oil exports as it make US soybeans that much more

expensive compared to other countries.

Corn rose in price in the belief that cold weather in key growing areas

may stunt growth. Temperatures should fall to freezing or near freezing

on May 7 and 8th. Because of this, speculators are cutting back on their

short positions and farmers are cutting back on producer selling. Corn

was higher by four cents, a good showing considering the uncertainty

that overshadowed other markets during the course of trading on

Wednesday. The corn crop is approximately 60% in the ground

compared to 32% a year ago at this time. Previously, it had been

thought that early plantings would lead to a record crop but if this crop

is subsequently damaged by weather then that would be a bullish event

for prices not a negative one.

Wheat futures also traded higher by 1.25 cents on Wednesday after

being higher by almost 2% the previous day, again on weather related

concerns.

Support Resistance

July Soybeans 9.65 10.00

July Corn 3.58 3.80

July Wheat 4.86 5.24

Chuck Kespert

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.

 

 

 

 

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