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Crude oil and US equity markets rally sharply 

Weekly Futures Report

07.15.09

Filed 6:48 pm Wednesday     

                                                       Last                                            Last Week   

Aug Crude                                 61.79                                                 60.15

Aug Heat                                    158.50                                             154.25

Aug XRB (Blended Gas)         171.20                                              164.36

Crude oil rallied sharply on Wednesday as the US equity market staged almost a 3% rally. The Department of Energy report showed that there was a greater than expected drop in crude supplies as refiners increased operating rates. For the latest reporting week crude stocks fell 2.81 million barrels to 344.5 million barrels. The trade was looking for a drop of 2.1 million barrels. Refineries operated at almost 88% of capacity, the highest level since last August. Also supporting oil was the dollar. Dollar trading has corresponded roughly 82% of the time with the price of crude oil. A weaker dollar makes crude oil more attractive as an investment. Crude oil rose about 3.4%. Oil futures are down 60% from year ago levels. Distillate supplies increased by 553,000 barrels to 159.3 million barrels. The trade was looking for a 2 million barrel gain. Gasoline inventories were higher by 1.44 million barrels to 146 million barrels, the highest level since last April. Traders were looking for gasoline supplies to increase by 875,000 barrels. Still, behind it all, there remains a lot of supply and weak demand. In political news, Nigeria continued to have trouble with rebels threatening to call off a recently brokered 60 day cease-fire. Nigeria produces sweet crude and supplies have been reduced by more than 20% since 2006.

 

 

                                                                Support                                     Resistance

Aug Crude                                             58.50                                                63.00 

Aug Heat                                               150.00                                             165.00

Aug Gas                                                165.00                                            173.00                                                               

***********************     

METALS

                                                                     Last                                              Last Week     

Aug Gold                                                  938.90                                            909.40

Sept Silver                                                 13.26                                            12.855              

Oct Platinum                                           1164.70                                          1102.50

Gold rallied sharply on Wednesday primarily due to a weak dollar. The one-day advance was the most in two months. Oil rallied and the dollar fell against other major foreign currencies. The Consumer Price Index came in higher than expected, introducing a whiff of inflation into the markets and this was reflected by the gold rally. The dollar index was down about 1.1%. Gold futures were up about 1.8%. Crude oil is up almost 4.1% on the day. Inventories fell for the fourth consecutive week. The street was looking for a drop of 2.1 million barrels. Money supply in crude oil remains negative. Demand should continue to be weak. The economy is still in the process of contraction and working off excess capacity.  Gold should immediately head lower again and retest the 915 level.

 

                                                             Support                                      Resistance

Aug Gold                                             918..00                                           949.00

Sept Silver                                            12.75                                          13.50                

Oct Plat                                               1125.00                                       1175.00

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

SOFTS

                                                                       Last                                     Last Week

Sept Coffee                                           118.85                                           114.75

Oct Sugar                                               17.77                                          17.20

Coffee prices rallied for the most in five weeks as a weak dollar spurred a rally in commodity markets. The dollar traded at its lowest level in more than a month. Coffee is rallying from an almost 3% drop since June due to a lack of a frost threat in Brazil. Coffee is expected to rally and test the 120 level before heading south again. The current rally is not expected to last as traders do not expect the prices to extend due to slack demand. Coffee is up 5.3% for the year.

 

 

Sugar was up for the fourth straight day. Brazilian output of sugar has slowed due to rain during the harvest. Sugar is up about 50% this year on perceived increased demand from countries such as India.

 

 

 

                                                          Support                                   Resistance

Sept Coffee                                                    112.00                                     120.00

Oct Sugar                                          17.25                                        18.05

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

                                                                  Last                                    Last Week

Nov Soybeans                                         9.044                                         8.92

Sept Corn                                                 3.294                                        3.252      

Sept Wheat                                              5.346                                        5.172

Corn futures fell from a one-week high as hedge selling by grain merchants hit the market. Corn is down 17% for the year.

 

The dollar traded at its lowest level in almost 5 weeks even as there was some support early in the sessions for the greenback. Because of the weak dollar corn and soybeans have  become more competitive against the world market producers. Corn is down 15% for the year, however while wheat is down by 13% and soybeans are down 6.3%. Grains need a higher energy complex to maintain higher prices.

 

 

 

                                                             Support                                    Resistance

Nov Soybeans                                          8.90                                        10.00

Sept Corn                                                3.150                                        3.450

Sept Wheat                                              5.15                                         5.50

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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