Re-nomination of Chairman Bernanke to the Federal Reserve casting positive
feature to the market
Weekly Futures Report
Filed 3:14 Wednesday
Last Last Week
Oct Crude 71.33
Oct Heat 187.41
Oct XRB (Blended Gas) 184.43
Crude oil was lower by more than two dollars a barrel on Tuesday as the
market ran into a wall of resistance at $75. The market had rallied up to this
level in part due to a better-than-expected reading of confidence from US
consumers. Housing market stability was also a positive feature. New home
sales jumped 9.6% for the latest reporting month. Of course, crude oil
continues to not trade according to traditional supply and demand
considerations. Many market observers believe that if that were the case crude
oil would be trading around $55 a barrel. A continued rally in the US stock
market was also a positive for the market. There was early selling on
Wednesday in front of the release of the US Department of Energy report
regarding supply and demand. Also the dollar was stronger against most major
foreign currencies, notably the British Pound. A negative for the market was
the idea that China that increase lending demands. If economic activity in
China slows it will have a negative impact on the demand side for oil. Another
positive feature to the market is the beginning of the hurricane season.
Another positive for the market was the re-nomination of Chairman Bernanke to
the Federal Reserve by the president. Iraq is looking to maintain current
production levels and is recommending that to other OPEC members. Volume has
been contracting as well with yesterday’s trade 30% lower than the average
over the past three months.
Crude oil initially had a rebound from the lows on the release of the
Department of Energy figures regarding supply and demand. Crude oil had a
build of 128,000 barrels while traders had been looking for decline of 1.15
billion barrels. Gasoline also had a drawdown of 1.7 million barrels while the
trade had been expecting a decline of 1 million barrels. Distillate stocks
increased by 767,000 barrels while the trade was looking for an increase of
100,000 barrels. The news inspired a short covering rally of about $.60 in
crude oil before prices fell back down towards the lows of the day.
One negative for the market is the fact that the Labor Day holiday in
the United States is late this year, occurring on September 7, the date when
many children are already back in school.
Last Last Week
Sept Silver 14.29
Oct Platinum 1237.00
Summer trading conditions prevailed in the gold market as little
progress was made on either side of unchanged. Gold was influenced higher by
better-than-expected consumer confidence numbers and a higher US stock market
while at the same time gold was influenced lower by profit-taking in crude oil
and general weakness in the grains. Also, the dollar was generally stronger
against major foreign currencies, a metals market negative. Gold was also
negatively affected by the idea that China may increase lending requirements
which would result in a slowdown in their economy. Platinum inventories remain
One positive for the market was the fact that German business consumer
confidence is at a 12 month high.
Last Last Week
Sept Coffee 123.10
Oct Sugar 22.40
Coffee continued to fall in price over the past five trading sessions.
Tightness in Colombian stocks seems to be easing. Coffee is lower by 4.2% for
the month. Then make Colombia said that coffee production may drop to 10
million bags down from 11.5 million bags and this inspired a rally. Open
interest continues to decline another sign of long liquidation.
Sugar continued to trade in a broadening top formation as prices have
not made new highs since the first week in August.
Last Last Week
Nov Soybeans 9.964
Dec Corn 3.264
Dec Wheat 5.066
Corn was under selling pressure on Tuesday after the US Department of
Agriculture said the crop conditions improved last week and that yields should
be higher than initially anticipated. 70% of the crop is in good or excellent
condition compared to 64% one year ago. Average yields may 162 1/2 bushels per
acre against a previous forecast of 161 bushels an acre. Crop conditions
continue to improve even in August which is a very positive sign for yields.
Wheat was higher on early trading on Wednesday on the idea that global
supplies may be smaller than expected. Australia, the fourth-largest exporter
of wheat, is seeing its production curtailed due to El Niño. Australia is
expecting less than normal rainfall in key growing areas. The country usually
produces 19 to 20 million tons but if El Niño persists, that production could
fall to 9 to 12 million tons.
Money flow in soybeans continues to be negative. Soybean production is
expected to reach a record of 3.19 billion bushels up 8.1 percent from last
year's 2.95 billion bushels. The current crop is about 77 million acres, the
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.