In spite of increase in oil inventories, Crude Oil futures rallied on an increase of Chinese production and lower than expected bank write-downs

 

Filed Wednesday 2:40 pm

ALL CHARTS ARE WEEKLY    

                                                            Last                                            Last Week   

Nov Crude                                       70.56                                      68.98   

Nov Heat                                           183.10                                 179.11

Nov XRB (Blended Gas)                  174.88                                 171.95

Going into Wednesday, the trade was looking for increased supplies with the release of the Department of Energy report. Instead, crude oil rose by 2.89 million barrels versus an expected increase of 2 million barrels. Gasoline stocks dropped by 1.6 million barrels while distillate stocks increased by 323,000 barrels. Distillate stocks continue to be at 26 year highs. Still the market was able to rally on an increase in Chinese production and also news that the International Monetary Fund believes that bank write-downs will not be as great as initially feared. There were some economic negatives for the market to contend with, however. The Chicago-area Purchasing Managers Index came in at 46 versus an expectation of 50 while the ADP private jobs forecast showed a loss of 254,000 jobs while market observers had been expecting job losses of only 200,000.  Last night the American Petroleum Institute stated that crude stocks rose to 340 million barrels while gasoline stocks decreased by 1.72 million barrels.

 

 

                                                           Support                               Resistance

Nov Crude                                             65.00                                  71.30 

Nov Heat                                               169.10                               185.00

Nov Gas                                                160.60                                     175.00                                                               

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METALS

                                                                  Last                             Last Week     

Dec Gold                                               1008.80                              1015.40

Dec Silver                                              16.69                                     16.91              

Jan Platinum                                         1302.60                            1332.80

On the last day of the third quarter, portfolio managers rushed into gold on the buy side to show it amongst their holdings. Gold is attempting to close out the quarter with its biggest a three-month gain in some time. The dollar was generally weaker against most major foreign currencies and this was a benefit. On a negative note, imports by India, the world's biggest purchaser of metal for jewelry fabrication, probably fell for a fifth consecutive month due to high prices. Sales in general to India have improved somewhat but overall, not enough. It's not expected that Indian buying will increase until prices retrace back to $900. Players will be interested to see if Gold is able to close above   $1000 an ounce with authority setting up a test of previous highs.  In secondary markets, silver performed well up $.51 on the day and copper was better by almost 9 cents again based on increased Chinese manufacturing activity. Also, the rally of over $3.00 in the crude oil by midday was a supportive feature. Another positive was the rebound in the stock market after early lows were achieved on the ADP private  jobs forecast and a sluggish Chicago-area purchasing managers Index report.

   

                                                    Support                                      Resistance

Dec Gold                                    981.00                                  1020.00                                                         

Dec Silver                                   15.85                                         17.50                       

Jan Plat                                     1262.00                                          1300.00    

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SOFTS

                                                                Last                          Last Week

Dec Coffee                                              127.80                              136.15

Oct Sugar                                                24.12                                21.55

Coffee was higher for the first time six trading sessions on Wednesday in expectation that demand will improve as the US recovers from recession pressures. The revision for the second quarter GDP for the US came in at 0.7% against expectations of 1.0%. Fundamental traders believe these numbers indicate that the demand side of the equation is improving. Coffee had fallen in price substantially over the last 5 ses  sions and the low prices had attracted some roaster buying.

 

 

Sugar headed up the charts again in an anticipation of a second straight global production shortfall. Sugar has more than doubled this year. India continues to have a very poor monsoon season which has been a price positive. Continued demand from Russia, Egypt, Indonesia and India itself will help support prices. Open interest in sugar continues to climb. Global consumption will exceed global production by 8.3 million metric tons up from an earlier estimate in June to 5.1 million metric cents.

                  

  

                                                 Support                                  Resistance

Dec Coffee                              123.90                                     128.00       

Oct Sugar                                    20.87                                       25.90

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                                                                  Last                                    Last Week

Nov Soybeans                                          9.262                          9.204

Dec Corn                                                 3.43                            3.302     

Dec Wheat                                               4.566                              4.600

Wheat was headed for its sixth quarterly drop, the worst price performance in 50 years. Speculation remains that global supply will exceed demand. Demand for US wheat has declined as global stockpiles have increased. Better weather in Australia is easing the drought stress on crops in there.

 

 

The yield on corn will be the largest in history unless early frost damages the remaining crops yet to be harvested. 37% of the corn crop in the United States is called mature at this point. Corn yields in the US are forecast to rise to a record 161.9 bushels per acre.

Soybeans were modestly higher on Wednesday due to a weaker dollar but the overall trend continues to be negative. Of course there's always the possibility of weather affecting prices and a powerful storm system and a cold front associated with it will be crossing the Great Lakes later today specifically hitting the Minnesota growing region. Money flow in soybeans remained negative

 

                                                                Support                          Resistance

Nov Soybeans                                          9.00                                       9.37

Dec Corn                                                3.305                                      3.52

Dec Wheat                                              4.31                                       4.68

 

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.