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Crude Oil Highest Supply Since 1990 Grains Rally on Chinese Demand

Weekly Futures Report

04.22.09

Filed 6:55 pm Wednesday     

                                                       Last                                            Last Week   

June Crude                                   48.65                                                52.12

June Heat                                     134.64                                              143.45

June XRB (Blended Gas)            138.99                                              146.33

Crude oil and its products were lower on Wednesday due to the Department of Energy report that stated that inventories rose 3.8 6 million barrels to 370.6 million barrels, the highest level since September of 1990. Earlier in the day, crude rallied thanks largely to a rally in the stock market. The economic contraction worldwide is still taking a toll on oil. Total daily fuel demand averaged over the past four weeks was down 18.5 million barrels, down 6.5% from the year earlier. Gasoline stockpiles were up 802,000 barrels to hundred and 17.3 million barrels. The trade had been looking for 700,000 barrel decline in stocks. Distillate stocks were up 2.6 million barrels to 142.3 million barrels. This was the biggest increase since January 9. The trade was looking for a drop in stocks of 1 million barrels. Refineries operated at 83.4% of capacity, up 3.1% from last week. The increase in refinery runs can be explained by refineries coming back online after maintenance had been completed. Money flow in crude is negative. Money flow in Hilo is positive but negative for gasoline. Rallies should continue to be sold.

                                                                Support                                     Resistance

June Crude                                            46.00                                                51.00  

June  Heat                                              129.00                                             142.00

June Gas                                                134.00                                              148.00

***********************     

METALS

                                                                     Last                                              Last Week     

June Gold                                                   892.50                                             891.20

May Silver                                                  12.305                                               12.74                 

July Platinum                                            1178.70                                          1221.00            

Gold and silver saw some buying interest on Wednesday as the International Monetary Fund stated that the global economy will continue to contract this year. The IMF is calling for a 1.3% decline in the world economies. Because of this, gold was bought as a safe haven. Gold had been lower for four consecutive weeks. Gold continues turn find resistance above $892.00 an ounce. The market continues to be torn between those who see massive government infusion of liquidity into the markets causing rampant inflation eventually and those who think the economy is going to just continue to contract and deflationary pressures will take over. Deflation is marked by continually lower interest rates, job contraction and price reductions to stimulate sales. Money flow in gold remains positive. GM may close production facilities for as many as 9 weeks this summer due to slack demand; this is a platinum negative.

 

 

                                                             Support                                      Resistance

June Gold                                            870.00                                         903.50  

May Silver                                            11.70                                           12.42         

July Plat                                              1140.00                                        1200.00       

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

SOFTS

                                                                       Last                                     Last Week

May Coffee                                                116.95                                   115.70

May Sugar                                                  13.22                                     13.14

Coffee maintained its recent strength and shot higher on Wednesday due to speculation that the strike by truck owners in Colombia will delay shipments.  Truckers are striking over high fuel costs. It's been estimated that 80% of the 156,000 union members are taking part in the strike. There's already a tightness in coffee supplies and the strike will only exacerbate this situation. Coffee is higher by 5.1% this year. Currently, there are no talks to settle this strike. Colombian exports fell to 6 3 million bags for the first quarter and are 16% lower than a year earlier. Columbia will produce 10.5 million bags this year down 16% from last year. The high cost of fertilizer has been a negative.

 

                                                           Support                                   Resistance

May Coffee                                     110.20                                          117.50          

May Sugar                                       12.50                                            13.85                                          

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

                                                                  Last                                    Last Week

 May Soybeans                                      10.46                                    10.35

May Corn                                                3.734                                  3.844

May Wheat                                            5.166                                    5.152

Soybeans have been strong thanks chiefly to Chinese demand. Fundamental traders believe the only way to reduce demand is for prices to continue to go up. World inventories should fall to 45.8 million tons down from 49.9 million tons. Export sales to China since last September have jumped 36%. The drought in Brazil and Argentina has diminished supplies there. The USDA has estimated that domestic stockpiles will drop to 165,000,000 bushels, down 20% from a year earlier.

 

Wheat was a little bit better in terms of price based on freezing weather in parts of the US in the Great Plains.  42% of the crop is in good condition. Quality is a question. Still, the price is down 14% this year based on increased global production and declining demand. Commodity funds are short so short covering could lift prices eventually.

 

Corn was lower on the idea that farmers in the Midwest US will accelerate plantings over the next week. About 5% of the crop is in the ground as of April 19. The average over the previous five years was 14% at this time. Money flow in corn is positive.

 

                                                               Support                                    Resistance

May Soybeans                                       10.00                                            10.60     

May Corn                                               3.63                                            3.84    

May Wheat                                            4.97                                             5.22    

Chuck Kespert

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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