Crude oil at years highs - Most futures markets rally as US dollar still
Weekly Futures Report
Filed 6.25 pm Wednesday
Last Last Week
July Crude 71.29
July Heat 183.12
July XRB (Blended Gas)
Crude oil shot to a seven month high after the Department of Energy
released its current data regarding weekly supply and demand. At the same time
as crude soared higher, gasoline traded above two dollars a gallon for the first
time since October. Crude stocks dropped 4.3 million barrels to 361.6 million
barrels for the latest reporting week. The trade had been looking for increase
of a hundred thousand barrels. The report was viewed as being incredibly
bullish. The trade was also looking for increase in gasoline stocks. Crude oil
for July delivery rose almost 2%. Gasoline was higher by 2.5%. The psychology
behind this market remains positive. Gasoline prices at the pump rose to an
average of $2.62 a gallon nationwide, the highest since October. Stockpiles of
gasoline fell by 1.55 million barrels to 201.6 million barrels. Fuel demand
averaged 18.3 million barrels a day, down 6.9% from last year at this time. Fuel
imports are down 2.55 million barrels. The trade is expecting to see a reduction
in supplies during the summer as refiners continue to import less oil and work
off inventories. The weaker dollar also was a benefit to the price of crude
oil. There has been roughly an 82% correlation between the dollar and the price
of oil over the past several years. OPEC also stated that they are not going to
consider production increases until the price rises to $100 a barrel. The next
regularly scheduled OPEC meeting is September 9. Traders are now prepared to
work with a new trading range between $60 to $90 a barrel.
Last Last Week
Aug Gold 956.80
July Silver 15.20
July Platinum 1272.00
Gold turned in a lackluster session on Wednesday as a rebounding dollar
offset demand. Even though crude oil reached a new, fresh seven-month high, gold
languished by comparison. As short-term rates moved higher in the US and the
yield on the 10 year note brushed up against 4%, the dollar rebounded modestly.
Many players view the pullback in gold based on stronger dollar as temporary.
Many players believe that the amount of liquidity, 12.8 trillion dollars, that
has been pumped into the US banking system and the idea that the Federal Reserve
would be willing to monetize debt and virtually increase the money supply by
doing so will eventually create inflationary pressures in the economy. Even
though money flow remains positive, gold is having a difficult time mounting any
sort of sustained rally. Gold bugs have been somewhat disappointed to see the
price of copper and crude oil shoot higher without being able to generate enough
buying interest to participate.
July Silver 14.80
Last Last Week
July Coffee 130.15
July Sugar 15.38
Coffee fell in price in New York as the intermediate trend is now
negative. The weather continues to be favorable in Brazil. Lower prices were
blamed on profit-taking, producer selling and a generally stronger dollar.
Coffee has rallied 18% this year due to tight supplies from Central America and
Colombia. Money flow is positive in sugar. The general strength of the Goldman
Sachs Commodity Index has proved a support to most commodities.
Last Last Week
July Soybeans 12.46
July Corn 4.356
July Wheat 5.96
A stronger dollar triggered some profit-taking in corn. The market really
isn't focusing on weather as much as it's focusing on corn as being part of a
commodity asset class. Corn had been up as much as 8% this month on speculation
that planting delays would reduce acreage in yield potential. The CRB index of
19 raw materials was up 14% in May, the biggest monthly rise since July of 1974.
Prices have been under some pressure lately due to a reduction in the forecast
for livestock feed demand. Corn used to feed livestock should fall to 5.15
million bushels down from 5.3 million bushels last year at this time.
Wheat futures fell to their lowest price level in almost 3 weeks as the US
Department of Agriculture predicted that US inventories will be higher than
previously forecast next year. Futures were down 17.75 cents or 2.9% as
livestock producers look to reduce herd size.
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