Mid-Week Market Trend Analysis

Mid-Week Market Trend Analysis
Mid Week 06.04.08
Jun.04 2008 12:59:41 PM

Weekly Futures Report

6.04.08

Filed 12:53 pm Wednesday

Last 7 days Ago

July Crude 122.85 130.72

July Heat 358.75 384.10

July XRB (Blended Gas) 324.50 337.90

 

Crude oil and its products fell on Wednesday after the Department of Energy released its report showing that oil stocks rose by greater than expected levels. The Department of Energy stated that crude stocks were up 2.15 million barrels. Gasoline stocks were up 2.2 million barrels and distillate stocks were up 4.4 6 million barrels. Additionally, refinery runs were also higher than expected. As far as the American Petroleum Institute report, traders were looking for an increase in gasoline of 825,000 barrels but the increase was actually 3 million barrels. Also, both reports indicated demand had decreased due to higher prices. Even with the Memorial Day holiday, gasoline usage was lower than year ago levels. In a related story, General Motors said it was suspending truck building at four different plants and that it may cease production of the Hummer, a very heavy military inspired truck which gets very low mileage. After the release of the news, crude was lower by 1.3%. It’s apparent that gasoline demand will be very poor over this summer. In a related story, major airlines are reducing their fleets due to the high price of jet fuel. Gasoline usage fell 4.7% last week from year ago levels. Prices at gas pumps are at the highest levels in history. Also, the indication from the Federal Reserve that interest rate cuts will be put on hold allowed the dollar to gain some strength against major foreign currencies and this too was a negative for crude oil prices. On Tuesday, India raised prices for oil by 10% another negative for demand side of the equation. OPEC also raised production .01% in May. Conversely, we see a lot of buying the natural gas market due to insurance against an active hurricane season in the Gulf of Mexico. Consequently, the technical picture for natural gas remains positive.

 

 

Support Resistance

July Crude 121.30 132.50

July Heat 352.50 380.00

July XRB 320.00 344.00

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Metals

Last 7 Days Ago

Aug Gold 883.90 902.70

July Silver 16.75 17.47

July Platinum 1995.90 2078.00

The metals traded lower over the past five sessions due to lower prices for oil and strengthen the dollar against major foreign currencies. Statements by the chairman of the Federal Reserve indicated at more cuts in short-term rates should not be anticipated by the market. Going further, he said he was observing with interest the performance of the dollar against major foreign currencies. This serves to strengthen the dollar which is a negative for commodity markets. Lower oil prices also served to temper demand for inflationary hedges. Also, talk of economic contraction in the euro zone was a price negative. Money flow in both gold and silver remains negative. If the price of oil should start trading comfortably under hundred and $20 a barrel they moved $850 goal would be likely. After that spiked $1-$425, copper is performed like a broken market and is now turning down to $350.00.

 

 

Support Resistance

Aug Gold 850.00 950.00

July Silver 16.00 19.00

July Plat 1985.00 2200.00

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SOFTS

Last 7 Days Ago

July Coffee 132.75 135.80

July Sugar 9.64 10.14

Coffee remained in an extended trading range with a downside bias due to dollar strength. This ranges been in place for about 2 1/2 months. There is always the threat of unusual weather in Brazil affecting the harvest at this time of year. Recent information from the USDA had cachet in Brazil suggests a more than ample crop. Production could be higher by 36% from last year. Also, Vietnamese production could be higher by 20% from last year. The market should continue to trade in this choppy two-sided manner with dollar strength/weakness inflections.

Long liquidation by funds and sugar is continued over the past five sessions. High ending stocks continued oppression of the market in a fundamental way. Greater scrutiny by the CFTC as to fun position limits and possible price manipulation is a negative for sugar. Remember that funds can establish huge positions both long and short yet never take or makes delivery of the actual commodity.

Support Resistance

July Coffee 130.00 142.50

July Sugar 9.00 11.92

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Last 7 Days Ago

July Soybeans 13.710 13.642

July Corn 6.092 5.912

July soybeans and corn were higher than last week’s prices but money flow continues to be negative. These sense that the dollar will maintain strength over the next trading period is a negative. Slow planting for corn to excess rains has led some traders to believe that there may be a late switchover to more soybean planting. Strike activity continues in Argentina which is a waste positive. This point in time the fundamentals are in conflict with each other so maybe the technical picture will sort things out and began the money flow is negative about corn and soybeans.

 

Support Resistance

July Soybeans 13.25 14.25

July Corn 5.85 6.252

 

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THERE IS A RISK OF LOSS IN FUTURES TRADING.