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The Energies Pit Review for September 20, 2010
By PitGuru Daniel Cronin
Crude Oil looking to rebound from a dip in the market last week and now with the November contract being spot month with October expiring I think you will see a bit of a lift in the market, especially with the WTI spreads and arbs having liquidated. The Nov/Dec contract has gotten to -180 which is a double bottom here and I like this to profit take and head back higher. Nothing too important on the economic data front this week, so look for Oil to trade from $74 to $78 in the November contract. The Enbridge pipeline is back and running but this news is old news now.
Natural Gas looking to stay above the $4.00 mark here as November will take shape soon in the coming weeks. If you can get an opportunity to buy Nov Natural Gas at $3.80 that is definitely a great buying opportunity on the dips.
References
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Metals Prices
Metals Prices – Futures vs Cash Market
It is important to distinguish cash market from futures markets when looking at a particular commodity. Many people do not realize that there is a difference between the two. The futures market is essential to a producer’s need to hedge against the actual commodity that they hold in their warehouse. In the paragraphs to come I will discuss the differences between cash markets and futures markets, and their advantages as well as disadvantages.
There are two basic options that exist for producers who want to forward price: forward pricing through cash contracts, and forward pricing directly through the futures market. Producers have commonly used the cash contracts, but did you know that only 5% of all farmers in the US use the futures market directly? Why would this be? Are cash contracts that much better than the futures market? Probably not; the real reason lies in a lack of knowledge.1
Let’s take a brief look at the advantages and disadvantages of forward pricing in the futures market vs. forward pricing through the cash market. Perhaps the most important point to keep in mind when discussing cash contracts and the futures market is that each time a contract is offered to a producer, someone is making that contract available by using the futures market. Because of this, cash contracts – at any point in time – will usually be less in price than a forward price in the futures market. By using a cash contract, we are paying someone else to forward price in the futures market for us.
Another advantage offered by using the futures market as compared to cash contracts results from the added marketing flexibility offered through the futures market. You can usually offset your contract at any time, meaning you do not have to deliver on the futures contract. With cash contracts, however, you are locked into delivering the amount of product at the price specified. This can create problems when crops fail to meet contracted levels or when potentially profitable copper prices must be passed up because of the fear of over-contracting.
Of course, all is not gravy in the futures market. Some of the disadvantages include the need of putting up margin money (good faith money required in order to trade futures contracts), the complexity of the market, and the understanding required to trade contracts. Another disadvantage is the inability to lock in an exact price (the price relationship between futures and cash markets, called basis, will fluctuate within a small range making a precise determination of forward prices offered impossible). Also, many producers desire to price less than the minimum standard contracts called for in futures markets. An example of this problem would be the producer with less than 25,000 pounds of copper (smallest copper futures contact) or 44,000 pounds of aluminum (smallest aluminum futures contract).
Trading in futures and options involves a substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.
1 Pricing Georgia Farm Products Through the Futures Market – John McKissick and Steve Turner
The Energies Pit Review For August 30th
It was a big turnaround for the energy markets especially in crude and the products as GDP numbers came in a bit better than expected in Q2 at 1.6% to help thrust energies higher. Crude oil is a very odd bird right now with all the structured trades pointing towards a sell off but it has surpassed $75. The WTI spreads have come off significantly trading at -105 and -110 in Oct/Nov and Nov/Dec respectively. The arbs have gotten hacked too with the Oct arb trading -150. Still this market is strong enough to bounce off the $70.50 support level. This week should be interesting with the non farm payrolls coming out. I think rallies need to be sold into.
Natural Gas had a tough time last week as this market got pummeled below $4 on the NYMEX. Inventories are very weak and this is the time of year when natural starts to sell off so look for this market to try and consolidate around the $3.60 level before heading any higher.
The Energies Pit Review For August 30th
By PitGuru Daniel Cronin
It was a big turnaround for the energy markets especially in crude and the products as GDP numbers came in a bit better than expected in Q2 at 1.6% to help thrust energies higher. Crude oil is a very odd bird right now with all the structured trades pointing towards a sell off but it has surpassed $75. The WTI spreads have come off significantly trading at -105 and -110 in Oct/Nov and Nov/Dec respectively. The arbs have gotten hacked too with the Oct arb trading -150. Still this market is strong enough to bounce off the $70.50 support level. This week should be interesting with the non farm payrolls coming out. I think rallies need to be sold into.
Natural Gas had a tough time last week as this market got pummeled below $4 on the NYMEX. Inventories are very weak and this is the time of year when natural starts to sell off so look for this market to try and consolidate around the $3.60 level before heading any higher.
James' Mound Weekend Commodity Review for Sep 19th
General Comments
I believe a major stock and commodity collapse is likely within the next 10 trading days. Take advantage of the early in the week commodity rally to develop short positions. The momentum escalation in many commodity markets sets up a spike high top and strong price correction. This anticipated volatility to the downside offers numerous opportunities to play put premium spikes in key markets like gold, silver, sugar, cotton, corn, soybeans, cattle and others.
Energies
Crude oil’s recent choppiness goes contrary to recent gains in commodities as well as the stock market. In particular there is a clear divergence between copper and oil prices, which offers a glimpse into the China component. This suggests that some premium is being taken out of the market from a lack of Gulf hurricanes and overall stable inventory levels. A strong punch in the gut to commodity prices will likely be all she wrote for the big 3 in the energy sector and a move to the low $60 range in crude oil is expected. Natural gas remains divergent and the recent bump off channel support on the Oct. contract may be the beginning of a bull run.
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The Weekend Commodities Review
A Market Review and Opinion Report By Head Analyst James Mound
For the Week Ending September 19th, 2010
General Comments
I believe a major stock and commodity collapse is likely within the next 10 trading days. Take advantage of the early in the week commodity rally to develop short positions. The momentum escalation in many commodity markets sets up a spike high top and strong price correction. This anticipated volatility to the downside offers numerous opportunities to play put premium spikes in key markets like gold, silver, sugar, cotton, corn, soybeans, cattle and others.
Energies
Crude oil’s recent choppiness goes contrary to recent gains in commodities as well as the stock market. In particular there is a clear divergence between copper and oil prices, which offers a glimpse into the China component. This suggests that some premium is being taken out of the market from a lack of Gulf hurricanes and overall stable inventory levels. A strong punch in the gut to commodity prices will likely be all she wrote for the big 3 in the energy sector and a move to the low $60 range in crude oil is expected. Natural gas remains divergent and the recent bump off channel support on the Oct. contract may be the beginning of a bull run.
References
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The Energies Pit Review
For the week of September 27th, 2010
By PitGuru Daniel Cronin
Somewhat strong week for the energy markets as Crude Oil closed out above $76 as the S&P rallied to above 1140 breaking key 1130 resistance. The market is seeing a strong rally in the wti spreads and arbs as Nov/Dec is now above -100 and the Nov arb is above -200. These spreads have rallied for three straight days now and this is having a major effect on keeping the flatprice afloat in the Crude market. Another bullish sign is the Euro/USD as this market is above $1.33 and climbing. It will be interesting to see how the inventory report fares this week. If supplies suddenly drop I believe you will see November Crude test $80.
Natural Gas had a great week as the November contract was trading above $4.00 and looks healthy enough to continue a rally. Supplies came out in somewhat of a positive fashion on Thursday and I think as the October contract expires the market will see November move in an even higher direction.
References
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The Weekend Commodities Review
A Market Review and Opinion Report By Head Analyst James Mound
For the Week Ending September 26th, 2010
Energies
A significant decline in oil prices is anticipated over the next 5 days, sparked by a selloff in the euro. Look to capitalize on this with a short term put play. Natural gas must break above the highs from September 16th in order to establish a bull trend.
References
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The Energies Pit Review
For the week of October 4th, 2010
By PitGuru Daniel Cronin
Crude Oil did it last week, rallying from the mid $75 range up over $80 as good economic news came out and the inventory report showed a draw back in crude supplies. Crude now above the $80 mark to $81.50 and I think you may see a bit more of the upside this week but there is huge resistance at $83.50 that traders need to be aware of. Look to get out of longs around this level as this market will likely hold. Gasoline and Heating Oil also following suit higher and this trend will likely take a pause this week as well. WTI spreads are starting to come off their highs here with Nov/Dec trading around -110 after getting up to -92 on Friday. Big economic data coming out on Friday with the non-farm-payrolls so watch this number carefully as the last two numbers have been very weak.
Natural Gas still trading range bound between $3.65 and $4.10 as this market tries to make up its mind on where to go next. Look for $3.65 to show great support but ultimately the inventory report will be the tell tale sign again on this market. Look to pick up some calls as the market gets into the support of $3.70 this week.
References
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The Weekend Commodities Review
A Market Review and Opinion Report By Head Analyst James Mound
For the Week Ending October 3rd, 2010
General Comments
Last week did not offer the timing I anticipated for an industry wide commodity and stock selloff as economic and energy inventory data helped to spike the stock and energy markets. The dynamic that I see, however, has not changed and therefore I continue to anticipate a massive price correction in the very near term in stocks, energies, grains, meats and softs. The dollar is a screaming buy and should rally rapidly to 83 before month’s end.
Energies
Dead wrong on oil last week, so no sense sugar coating it. The market spiked on bullish inventory numbers, a declining dollar and strong economic data. Overall, crude oil and its derivatives are in a bull breakout, one that I expect to be short-lived due to a U.S. dollar reversal. Natural gas continues to play counter trend to oil, an interesting divergence that should help it to rally amid an oil reversal.
References
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The Energies Pit Review
For the week of October 11th, 2010
By PitGuru Daniel Cronin
Crude Oil traded up to the huge resistance at $84.50 on the NYMEX last week as equities continued to rise along with the weakness in the USD. The bank of Japan lowering interest rates was a huge catalyst for all markets worldwide and this cause a spike up in commodities. I believe this is where you need to develop a short position as the market has rallied some $10 in the last few weeks and is overbought up here. The S&P climbed to 1160 but still with 9.6% unemployment it still seems hard to fathom why the Crude market was up to $84.50 in the first place. Look for $80 to be tested again this week as profit taking will occur.
Natural Gas has been looking pretty bearish these last few weeks trading in the lower end of the range at $3.60 with inventories coming out last week higher than anticipated. I would wait to dip back into this market until the $3.60 level looks like it can hold for a few more weeks. If this market gets below there then I believe $3.45 is definitely within reach.
References
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The Energies Pit Review
For the week of October 18th, 2010
By PitGuru Daniel Cronin
Energies had a bit of a steady week last week but settled on the downside of things at $81.25 in Crude Oil as traders started taking profit with the market looking to roll over below $80. This $80 level still offers great support and will be very tough to break as very weak news needs to come out to hit this market hard here. The S&P was up to 1175 and the Euro/USD traded above $1.41 although I think the market will see these trade lower as well. WTI spreads have stalled up here at the -6 level and are also looking to take profit. Look to still sell any rally in Oil here as $84 still holds great resistance with the downside looking like more of a play to me for right now.
Natural Gas still getting knocked backwards with the soaring inventory levels and the weak demand as this market now trades below $3.50 to $3.45. Still room left on the downside for sure as the market could test $3.25 even by this week if profit taking continues in other energy market products. I believe Natural Gas should not be played from the long side yet as there is still downside to go.
References
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The Weekend Commodities Review
A Market Review and Opinion Report By Head Analyst James Mound
For the Week Ending October 17th, 2010
General Comments
Last week I released my 4th Quarter Commodity Outlook and a special report that forecasts the imminent collapse of gold and silver. The report is 30 pages of market analysis covering energies, softs, metals, grains, financials, and meats. It is still available for 50% off by visiting http://commodityoffers.com/mega-forecast4.html - the offer expires October 18th.
Energies
Crude oil is going to be heavily dependent on the U.S. dollar as it is dictating foreign demand. Supplies are one thing, but a dollar rally is likely to thwart near term supply concerns. The dollar bounced ahead of key trendline support and appears to be changing its very bearish trend to a potential bull run, which I expect will top crude oil and bring strong selling through the end of October. Natural gas remains a long term buy with straight calls to play a volatility pop, and is a good spread against short heating oil (1 to 1).
References
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The Energies Review
For the week of October 25th, 2010
By Daniel Cronin
Well, here the market is, back in the middle of the range again as crude oil is trading at $83.50 after trying again to test the lows of $80. Crude Oil did fall below $80 briefly last week only to climb back as equities were called higher and the Euro rallied against the USD. WTI spreads lost some momentum last week as well with Dec/Jan losing steam and also in the back of the curve with Dec10/Dec11. The USD's weakness is a huge factor to the oil price rally and I think that the market will see another downward leg to $80 as technical numbers are again going to be tested and held on the upside here with Crude's $84 level and The Euro/USD's $1.4150 level. Look for Crude to try and first rally up to $84 but get sold off and eventually test $80 again on the downside.
Natural Gas with another disappointing week as the market came off to $3.30 on the NYMEX as another inventory report came in weaker than expected last week. This market has been hammered ever since breaking $4.00 on the downside and just hasn't really found any legs to bottom out yet. I still think this market has room to move downward. Next stop could be $3.15.
References
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The Energies Review
For the week of November 1st, 2010
By Daniel Cronin
Crude Oil still stuck in this trading range but after this week the market will have much better direction on where it wants to go after the FOMC meeting and the non-farm payrolls at the end of the week. Crude has been stuck between $80 and $84 for the last month now but speculation over the weekend led that the Federal Reserve will announce another round of credit-easing measures to help spur growth in the U.S helped the Euro rally and crude as well above $82 per barrel. WTI spreads have gained in recent days and so has the market down from support at $80.50. I believe the market will rise up to the resistance of $82.70 today before any news comes out, and then it’s all fair game from there. $84.50 definitely can be tested if credit ratings ease even further so keep an eye out for this number.
Natural gas has been on a real surge since the November contract came off the board. December Natural is now above $4.08 looking to test key resistance of $4.10 as this market has shot up since consecutive inventory reports have come out better than expected. This market looked to be headed to $3.00 but after the depressed November contract went off the flood gates opened up and buyers came in chomping at the bit to get a piece of the market. For now it needs to see a nice close above $4.10 to continue momentum.
References
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The Energies Review
For the week of November 15th, 2010
By Daniel Cronin
The energies had a great start to the week, rallying to new two-year highs in Crude Oil as prices surged past $88 per barrel but faltered in the later stages of the week as growing concerns over debt crisis in Europe popped back into the mix as Ireland is now under scrutiny. This led to a fall in the futures and global stock markets and Crude Oil fell to the huge support of $84.50 which was at one point huge resistance in this market but has since made way for great legs to stand on. Even as the Euro weakens against the other major currencies and the USD continues to rise, the price of these energies have remained positive which has been very odd to see as this has not been the usual scenario. I believe that this $84.50 is great support and one will see the flatprice bounce off this level to trade at $86 before the inventory reports come out this week. The market has been getting some bullish numbers the past few weeks and I don't think this will be any different.
Natural Gas had a roller coaster of a week first rallying in Dec to $4.20 only to lose all of its gains as inventory reports come out bearish Thursday to trade down to $3.75. This market looks to enjoy a nice support line at $3.60, however, and I believe it will be reaching $4.00 before $3.60 just based on technicals in this market. I like Natural Gas at this $3.80 level and would recommend looking at some long term OTM calls.
References
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MoundReport Weekly Review for November 14th, 2010
General Comments
The commodity correction appears to have begun, a little later than anticipated, but with enough volatility to indicate the move is underway. The vertical momentum (or velocity of decline) is just beginning to expand, setting up further declines in potentially shocking intraday price moves – most notably started by markets like oil, soybeans, sugar and coffee.
Energies
Crude oil’s plunge on Friday is indicative of the spec and fund selling I expect to see increase as the stock market declines and global economic outlook weakens. The energy sector as a whole piggybacked the commodity inflation boom of the last few weeks, but fundamentally lacks the geopolitical concern or supply issues that would justify such high prices. Oil is likely in a long term consolidation phase, having topped below $150 and above $32. The market is testing the upper inside range, and I expect it to fail all the way to $55 or lower. Natural gas remains a long term call buying opportunity to play the volatility pop to the upside.
References
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The Energies Review
For the week of November 22nd, 2010
By Daniel Cronin
Energies had a less than stellar week as Crude fell to $81.98 which was down 4.9% for the week in the January contract as Ireland's debt crisis moves into full swing in the Eurozone. “Energy prices also fell at the end of last week after China ordered banks to raise reserves in a move that may slow growth and crimp fuel demand in the world’s largest energy-consuming country.” (1) WTI spreads, however, rallied in the front as Jan/Feb - which is now the spot spread - rallied up to -59 and the Jan arb, which fell to -300 on Friday’s trade rallied up to -250 before the weekend set in as traders started to profit take on this from the short trade that occurred from -90 to -300. Look for opportunities to sell on the rally in January somewhere above $83 to $84 as crude prices will likely gravitate toward the $80 level as the S&P continues its slide below 1200. I believe OTM Puts will be a nice play as the market looks to head lower as hedge funds cut their long bets on the price of crude.
Natural Gas had a wonderful ending to the week as inventories were much better than anticipated on the Thursday session and December contract spike to above $4.10 signaling a bullish trend for this market. I think pull backs below $4.00 should be bought as Natural is now finding a nice base at $3.70 and looking to consolidate a bit more before moving even higher.
References
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Pitguru's Engergies Review for Nov 29, 2010
By Daniel Cronin
Energies are called slightly higher to start the week at $84.35 in crude oil after consolidating at the $81 level in the January contract. The Europe debt crisis is back in swing with Ireland having major problems and Portugal and Spain heading into the same mix sending the Euro/USD below $1.33. With this, one would think that crude oil would have broken down below the $80 mark. Yet this market stays resilient above $84. I would suggest looking at the OTM calls in January contract as this market seems way overpriced for the economic conditions right now, especially with rising inventories last week.
Natural gas had a very nice comeback from below $4 levels to trade at $4.30 on the Nymex as the January contract looks to flourish as spot month. Inventories, although very high, have been posting better than expected numbers for consecutive weeks and look to continue this trend. Look for $4.50 to be great resistance for now but if the price does drift towards $4 this could be a very good opportunity to pick some contracts.
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The Energies Review for Dec 6th, 2010
By Daniel Cronin
The market got bad employment news last week with non-farm payrolls data. The national unemployment rate moved to 9.8% and supplies increased in Crude Oil and Cushing Oklahoma, yet the energy markets made new yearly highs as Crude blasted through the huge resistance of $88.50 to above $89. Very interesting what is happening in the back end of the curve as Cal 12 Cal 13 went out of control as spreads went higher and higher. This is almost reminiscent of 2007-2008 when spreads went bid for in the back of the curve as now Dec11/Dec12 gained +90 cents Friday to +97. Dec12/Dec13 gained almost +105 as this market rallied to +115. The backwardation has really started to kick in and if one can remember back to the 2008 year once these spreads did that $90 crude was easily obtained. However, past performance is not indicative of future results. No matter what’s going on fundamentally, I think this market will likely continue to move higher as it has passed resistance. Look for $90 to $92 this week in Crude.
Natural Gas had a great week rallying to $4.34 in the January contract on better than expected results from inventories and in my opinion, this market is probably headed higher. I believe Natural will break the resistance of $4.50 this week to confirm the upside move.
References
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Energies - December 13, 2010
By Daniel Cronin
OPEC has kept inventories levels unchanged this weekend as prices stayed relatively unchanged last week with a range of $90.70 to $87.50 a barrel on the NYMEX. “OPEC has maintained a production target of 24.845 million barrels a day since December 2008, the longest period that quotas have stayed unchanged since they were first used in 1982. The 11 members with quotas pumped 26.7 million barrels a day last month, 1.9 million more than targeted.” (1) The news of the unchanged supply increase will lead to higher future prices this week as the only change members were considering was to tick up inventories as the price of Oil has gained nicely for the Saudis. Equities have been making new yearly highs with the DOW now over 11,400 and climbing. This, with the OPEC news, will likely send prices over $90 this week as the strength in this market will continue. WTI spreads have stayed relatively steady after the dip last week as f/g trades -54 and g/ trades -48. These have actually been on a bit of a decline coming down from -35 but still hanging around the -50 area in the front. Dec11/Dec12 found support at +52 and has bounced back up to +81. January Arb still very weak as brent continues to be the leader with Jan wti vs brent trading right at the support of -3.00. I might look to be a buyer of some OTM calls or try and get in on flatprice below $88 because $90 will be coming up again very soon in my opinion.
Natural Gas making the charge up again after last week’s decline on weakening inventory levels as this market closed above $4.40. Natty was having a great ride to above $4.60 levels but plummeted -20 cents on a bad inventory number on Thursday. This market quickly got its legs underneath it and now looks to be headed back up to $4.50.
The Enegies Review For the January 3, 2011
By Daniel Cronin
Crude Oil had a sharp spike to end the week as it rallied +$2 to close above $91. It looks to me like the start of the new year will have a bit of a spike to it as I believe Crude will retest the $92 level area. WTI spreads are falling hard this morning as G/H trades below -90 with the front arb getting very weak right now. It is odd that these conditions are happening in a rallying market. Look for $92 to be broken this week.
Natural Gas had a great week last week rallying from $4.00 to trade up to $4.30 and I believe this market will move higher as well. The 50 day moving average is rallying and will cross the 200 day moving average within the next month, and I see this as a bullish sign for longs. This market will likely look to test $4.50 this week.
References
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The Energies Pit Review For January 10th, 2011
By Daniel Cronin
Crude Oil came off from the highs of $90+ to the big support at $87 last week as there was a pool of buyers at this level playing the technical game. The fire in the Canadian Oil facility on Thursday really bolstered the market as wti spreads went from -140 to -95 in Feb/March and March/April went from -120 to -75 as traders bought up the front month contracts in fear of a supply shut down. There was also another scare at Prudoe Bay, an oil line leak happened Sunday night and this had the same reaction as the Thursday scare. Spreads have since calmed down from the highs however as G/H trading -115 with H/J -96. I look for Crude to test the $87 level again with this being great support. Trading range should be $87 to $90 but I am looking for more of a test to the downside.
Natural Gas still looking very healthy above the $4.40 level as prices are now consolidating here waiting for the next move higher. The technical indicators look bullish here with the golden cross set to happen very soon. I would be playing the long side and look to buy a dip below $4.30 in the $4.0 area if at all possible.
References
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The Energies Review For the week of January 24th, 2011
By Daniel Cronin
Crude Oil had a bit of a turnaround last week as investors and traders alike sold the energy sector on profit taking and higher inventory supply as the March flatprice come off to $88. This is very key support here at the $88-$87 level so look for prices to stop here first and then figure out where it will go from here. With the selling of the WTI spreads in the March-April now going below -150 and the arbs (wti vs brent) in March looking to head to -10.00 I would say the flatprice wants to run south for now. After $87 the next big support level I see is $82.
Natural Gas continues to make headway and is at its highest point of the year so far at $4.75 as this market looks poised to get to $5.00. This is being propelled by the bitter cold the Northeast is having the last few weeks. I like this market to keep going higher and I believe any pullback should be bought here as prices look very healthy above $4.50.
References
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The Energies Review For the week of February 7th, 2011
By Daniel Cronin
I think traders needed to fade the rally in the flatprice and spreads last week as there was a big premium put into both flatprice and spreads with the geopolitical tension in Egypt being lowered as Mubarak said he will not confirm run for office. H/J traded up to -200 where it met huge selling pressure to put it down where it is now at -290. March wti traded above $92 only to get slammed down to $88 where there is huge support. This week I look at opportunities to buy on the dip as support in flatprice is at $87 to $88 and will move to over $90 as the mess in Egypt is still not over. Wti spreads continue to get beat down and I look for opportunities to be short these heading into next week. The roll starts this week and I believe spreads should continue to get weaker.
References
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The Energies Review For the week of February 14th, 2011
By Daniel Cronin
Crude Oil had a whipsaw like week that saw the flatprice move between $85 and $88.50 as Mubarak was playing musical chairs with his presidency, sparking rallies and sell offs alike. March crude, which only has a few days left to trade, is below $85.50 but most everything else in the space is up as the contango steepens in the WTI spreads. H/J crude is now below -30 and looks to continue to slide here as some have suggested a test below -400 by the end of expiry. The April/May is also very weak as this is below -340 and I would like the play to sell this as I believe this spread will reach new lows. I think the back end of the curve from June out is a buy this week as the contango appears too powerful in the front to try and get long there. Look for a hold of $84.50 in March as the week closes out.
Natural Gas has had a bad losing streak as March Natty is now below $4.00 with the oversupply this market has. I believe that prices are in an area that appears oversold and I think it could be picked up just on technical support right now. Look for long opportunities in the April contract somewhere between $3.96 and $3.90 as Natural Gas could once again test the $4.00 mark.
References
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The Energies Review For the week of March 7th, 2011
By Daniel Cronin
Another week of rallying energy prices continued as tension in the Middle East, a falling dollar, and rising Greek debt issues fueled the fire under crude prices. Fighting increased between Libyan rebels and troops loyal to Muammar Qaddafi, reducing the nation’s crude-oil output by as much as 1 million barrels a day. (1) The contango in the wti vs brent contract is still in effect but rallying here as the April arb now trades at -$11.00. WTI spreads in the front still higher as traders gobble up the front month contracts here with May/June now trading -50 and the June/Dec looking to go backwardated. With the USD falling and still fighting in Libya this Crude market will likely continue to rise and $110 is next on the horizon.
Natural Gas continues to slump now below $3.80 in the April contract as continued supply increases sell this market off. If this market gets below $3.70 which is great support then it could be headed for lower lows here on the NYMEX, even with every other energy moving higher.
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The Energies Review For the week of March 21st, 2011
By Daniel Cronin
Crude had a very wild ride last week selling off to $97 in May only to come back +$7 as bombings began in Libya over the weekend. The USD has broken the $1.40 barrier on the Euro/USD and this is adding to oil's gain as May crude is up to $104. Traders need to pay special attention to the Middle East as this is a very sensitive area that can quickly turn the market either way with each fresh piece of news that comes out. Of course, the story in Japan must not be overlooked with the radiation in the nuclear facilities still causing problems. All of these factors are leading towards a rallying oil price and I believe will continue into this week so look for resistance in May crude oil at the $108 level. If this should break the market may be off to the races again.
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The Energies Review For the week of March 28st, 2011
By Daniel Cronin
Crude Oil had a very dull week as traders were watching the headlines waiting patiently for any news to move the flatprice in either direction but to no avail as May Crude stayed around $105. I believe this week there will be a liquidation in the flatprice as the oil price has at least $5 of premium in it right now and many traders and analysts will likely start to get impatient and sell off positions here. I will look to get into OTM Puts as I believe the price of Oil could get back to $100, if not lower. Natural Gas had a very good week rallying above to $4.50 in the May contract and I believe prices can be held up with potential support around $4.30.
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The Energies Review For the week of April 4th, 2011
By Daniel Cronin
A bit of role reversal in the energy market last week as crude had all the making of liquidating with a bearish DOE numbers of +2 million barrels that sent this market to $103.50, but a quick reversal of flatprice came about and has sent the crude oil market past resistance of $106 to trade at $108.50. This is a huge number that was broken to the upside and now crude oil is off to the races higher as $110 is well within reach in my opinion. Gasoline has roofed to $3.15 a gallon and I think you can be sure that prices at the pump will eclipse the $4.00 mark this week or early next. This rally in the price is definitely not a good thing here and consumers will be in danger if crude eclipses the $110 mark which it looks like will happen. Still keep an eye out for any news out of Japan and Libya, but for right now I feel it’s rally time in the oil market.
References
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The Energies Review For the week of April 25th, 2011
By Daniel Cronin
Crude oil had another positive week climbing up to $112 a barrel after liquidating down to $106 earlier in the week. There seems to be a range bound territory right now with the WTI from $116 to $105.50 and I would look for this trend to continue with Crude grinding higher ever so slightly. The Euro/USD rallied to the upside (weak USD) as this market broke out above $1.45 to the upside and this has been the weakest the market has seen this so far this year. Gasoline at the pump has now risen over $4 and is inching higher to the $4.30 mark. This is putting a huge burden on consumers and will probably force some to not take far vacations this year. The Crude market finally saw a drop in supplies which added a bit more fuel to the fire. I am looking for $116 to be the resistance this week but the market, grinding the way it keeps on, is likely headed a bit higher after breaking this number.
References
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The Energies Review For the week of May 2nd, 2011
By Daniel Cronin
Breaking news over the weekend as Osama Bin Laden was killed by US forces, this news coming out on Sunday night as Crude came off to $110.80 before rallying back to $112.40. This is a major headline as it took 10 years to capture Osama but now it is finally done. The war on terror can slowly be chipped away now. I believe this will have a negative impact on the price of Crude Oil and the market should see lower prices on this huge news. There was a big premium on the price of Crude because of the war on terror, and I feel this should be cut significantly now. I will look for Crude to test $110 and then $105 for the next support.
References
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The Energies Review For the week of May 9nd, 2011
By Daniel Cronin
Energies came off very hard last week, almost $18 in crude alone in three days as length got liquidated form the market as there were many sell stops below the $105 mark in the WTI. I think this is what the economy needed as gas prices were soaring above the $4.00 mark so a good sell off will potentially take some of the burden off of US consumers. I am looking for crude to try and regain form above $100 and I see this market testing $102 this week. The USD gained significant strength from $1.49 to $1.43 versus the Euro so look for this to get a bit of a pop as well with a weaker USD.
References
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The Energies Review For the week of May 16th, 2011
By Jurgens H. Bauer
Crude oil remained rather steady last week with all of the big moves the market has seen, closing under $99 as the main story was the Euro weakening against the USD. The Euro/USD closed under $1.4105 as commodity prices around the world kept on falling. Gasoline prices fell huge last week after supplies increased and was limit down one day. Gasoline now trades around $3.00 with retail gas potentially falling below $4.00 soon. This will take off the huge burden for consumers here as the price has steadily been decreasing the last two weeks. I am also looking for oil to trade from $96 to $101 this week with the downside being tested more. I believe $94.50 is huge support in this market so watch out for that level.
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The Energies Review For the week of May 23rd, 2011
By Daniel Cronin
The energy market had another week of testing the support of $95.00 in the flatprice as the market traded a bit sideways with a test of the low end on the NYMEX. As reported on Bloomberg, news over the weekend about European debt concern arose again with Greece as Greek Prime Minister George Papandreou is scheduled to brief his Cabinet this week on budget cuts and asset sales to keep European aid. Greek government bonds plunged May 20, driving 10- year yields to a euro-era high, on speculation the nation won’t be able to avoid reorganizing its debt. The spread, or yield difference, between the 10-year bonds and similar-maturity German bunds widened to a record. Fitch cut Greece’s credit rating to B+ from BB+, four notches below investment grade. (1) This will likely have a huge effect on the market with the Euro/USD going to test $1.40 and no doubt a sold off equity market. I will look for crude to again test $95 as the market heads into the new week on this news.
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The Energies Review For the week of June 6th, 2011
By Daniel Cronin
Last week saw crude oil try and rally on the NYMEX but got stopped in its tracks above $103 as the Case Schiller Index dropped to its lowest in 10 years and unemployment rose. Crude has been stuck in a range from $95 to $103.50 for the last few weeks now and it looks like the downside maybe tested again with all the bad economic data coming out recently. The July arb is now down to -1560 and I think it is looking to go below -1600. The Euro/USD recently rallied giving other commodities a boost but not the oil market. The sense is that $97 is an area that will be looked at soon. Natural Gas continuing its great run here and just might have broken out with trades above the resistance of $4.75. This market had a strong inventory report last week to send prices higher. $5.00 is still huge resistance in my eyes.
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The Energies Review For the week of June 13th, 2011
By Daniel Cronin
Crude Oil having a tough time advancing through the resistance of $103.00 last week and with the actions of the stock market going lower, crude fell too, down to settle just above $99 as it closed out the week. The weakness in the equity market is a bearish sign for crude. What’s also very bearish is the arb markets and how much they have fallen in the last week. The July arb now trades -$20. That is unbelievable to me. Brent crude has a $20 premium to the WTI. Brent has taken over as the benchmark for crude oil and this is having a negative effect on the flatprice. Also, WTI spreads are lower as well. These factors are looking to a continued downtrend and wti will try and test that $95 level again soon as there has been a triple bottom there now.
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The Energies Review For the week of June 20th, 2011
By Daniel Cronin
The energy markets have broken significant lows last week and I think they are looking to head lower this upcoming week as the USD strengthens and the S&P falls once again. Crude Oil fell below the triple bottom of $95 and is now at $92 in the Aug contract trying to head lower as major players got stopped out of the market below this $95 level. WTI spreads after the first 6 months have really gone down with Dec11/Dec12 now as low as -250. The Arb markets are coming back in line as Aug Arb trades down to -20 again after rallying to -17 last week. I will look for Crude to test the $90 mark, and I believe this could be done very soon in the week. Natural Gas lower after getting above $4.90 the last few weeks as this market is now $4.30 after a big supply number. I will look for Natty to trend lower to $4.10.
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The Energies Review For the week of June 27th, 2011
By Daniel Cronin
Crude Oil had a huge week as President Obama ordered millions of barrels unleashed into the open market sending the price of WTI below $89 at one point. The news happened very suddenly and very fast as crude dropped from $95 to $94 in afterhours trading, then dipped below $90 that same day as the oil markets are whipping around. The huge news has been the drop in the Brent flatprice as Aug Brent now trades below $105 looking to test $100. The arbs have really rallied of late with the Aug arb now above $14 after being as low as $21. The Brent spreads have also played a major role in the liquidation as they have moved significantly lower in the last few trading days. The Z/Z Brent, which had been +225 just last week, has fallen more than -$3 to now trades at -100. This move has been colossal and the whole market has had a tough time reacting to this. It’s been like the flood gates have opened up and everyone is selling Brent spreads. Look for the selling to continue on this week as boxes get stronger coming back from their lows. Crude has now seen a low of $89.70 twice now. This is a very huge support level and if this gets broken the market could see lower lows as the sell off continues. I will look for $89.70 to be pivotal price in the coming week ahead.
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The Energies Review For the week of July 11th, 2011
By Daniel Cronin
The energy market had a very interesting week with the crude oil price rallying above $96.00 resistance and getting to $99 before falling back heavily on the weak job report on Friday. The equity markets rallied to new heights this year over 12,700 in the DOW until Friday’s glum report as Crude sold off hard and down below the $96 level. This is very critical as the resistance now becomes potential support so watch closely for any close below this level. If a significant downshift is in the market below $95.50 this will confirm the downside and I expect to see $94-$92 this week. The USD has had a significant rally from $1.46 to $1.42 in the Euro/USD and this market is looking strong as well (strong USD) so this points to a lower energy price as well. The arb market has completely collapsed again with the Aug arb trading -22.00, all time lows for this market. With all of these factors coming into play it looks to be a down market for the energies this week.
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The Energies Review For the week of July 20th, 2011
By Daniel Cronin
The energy markets had another up and down week with the crude markets falling to $94 and rallying as high as $99 as the US equity market slowly came off of its highs of the year. Crude has now had a range between $90 to $99 with great resistance at $99 as the market has failed twice to get beyond this level. With the credit rating on the US in jeopardy and Euro having trouble on its own with defaults it seems likely that crude has more room on the downside for right now and will look to head lower this week. The USD has risen sharply and is now under $1.40 in the Euro/USD. I would look for more pressure to come on the Euro as countries keep needing to get bailed out. The products have held up quite nicely as both heat and gas cracks are trading around $34 right now. I believe one may see a breakdown in the products as these are usually the first to go in a downward market. Look for the products to come off of their highs and this will lead crude lower.
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The Energies Review For the week of July 25th, 2011
By Daniel Cronin
Crude oil lifted above $100 briefly at the end of the trading week last week as supplies decreased and the Euro rallied to over $1.4300 in Euro/USD. The crude market has held up very strong even as the debt ceiling crisis looms over the market here. WTI spreads in the front and back have been very strong with Z/Z crude oil rallying to over -290. The products including gasoline (RBOB) have been sold recently into this rally as the gas crack has come off $4 the last week. I will look for WTI to come off as the uncertainty around this market continues ahead of the debt decision. With gasoline faltering, and the big news ahead next week, I expect Crude to test the $97 mark as investors sell in front of the news.
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The Energies Review For the week of August 1st, 2011
By Daniel Cronin
Last week the market saw crude close out relatively flat with a run to $100.60 and then a dive back to $95.70 as investors anticipated the debt ceiling issue. Well, good news for the markets as the issue seems to be resolved for the moment with Congress coming up with a plan to raise the debt ceiling as the S&P opened up +16 on the overnight Sunday session. Crude looks to be headed higher for the beginning of the week but I believe OTM puts could be purchased here as crude will likely drift lower after the news settles in. Arbs have gotten crushed again with Sep now -22. This is the lowest it has been ao far and a good indicator of the downward pressure being put on wti.
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The Energies Review For the week of August 8th, 2011
By Daniel Cronin
Huge sell off in the energy markets as the debt ceiling agreement was a moot point as traders rushed to sell in the $94-$98 range and then the market tumbled on the news that the US will lose its AAA rating. This sent the markets into a free for all as Sep crude broke huge support at $90 to trade down $83.40, right where it is right now. Fear swept the market at the end of the week with the huge liquidation and this will likely continue into the weekend. $83.00 is huge support on the downside and if this does indeed get breached then the WTI will be in a for a rude awakening as traders will rush to sell at that critical point.
Natural Gas is in a huge decline now below $3.90 in Sep as this market is getting on shaky ground down here. With consecutive reports of high supplies and the economy the way it is right now, natural gas may be in for some trouble if it heads lower than $3.70. This market has been in a nice range from $3.80 to $4.75 so these levels are critical for the natty this week.
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The Energies Review For the week of August 15th, 2011
By Daniel Cronin
The oil market saw a bounce back in price last week as the markets were oversold below the $81 dollar range in Sep WTI. September crude closed out the week at $85.38. The equity markets got a bit of relief as the S&P rallied back over 1150 and the DOW over 11,000 and WTI pushed higher from $78.50 at one point getting as high as $87. The back of the curve rallied huge with Dec11/Dec12 crude oil going from -520 to -360 as many banks were buying up the back of the curves in both WTI and Brent. I believe this week is a week to take any unrealized profits from longs at $80 as I feel the market may head lower after the "dead cat" bounce it has just seen. I would look to get into some OTM puts as this market has potential to drift lower this week.
Natural Gas teetering on the $4.00 mark again here as prices shifted higher last week above $4.15 but have since dropped with the abundant supply. Look for NG to drift south of $4.00 and into the $3.90 range. Good support is at $3.80 in this market.
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The Energies Review For the week of August 22nd, 2011
By Daniel Cronin
The energy market came off hard at the end of the week last week as crude fell from $89 to $81 very fast as the economy still is weak and the equity markets sold off. The Dow is back under 11,000 as turmoil is still rampant. Crude oil, gasoline, and heating oil look to continue lower but I believe $80 will be good support for oil and shorts should think about taking some profit in the low $80s. The market looks to be range bound from $80-$90 here.
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The Energies Pit Review for August 29th, 2011
By Daniel Cronin
The energy space did a lot of consolidating last week as crude oil bounced around from $82 to $87 with huge support at the $83 level. The equities look to be trying to build a support base in the DOW and the euro has seen itself increase in recent days against other major currencies. I believe crude will still try and keep a neutral range but looks like the upside could be tested more this week as there have been higher highs and higher lows. Gasoline and heating oil have seen tremendous strength with the heat crack over $40 and gas crack over $32. I am wondering when these will break down but just have not seen it yet. Natural gas looks to be bought in the $3.80 area with OTM calls as this market could once again head over $4. References
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Metals Prices
Metals Prices – Futures vs Cash Market
It is important to distinguish cash market from futures markets when looking at a particular commodity. Many people do not realize that there is a difference between the two. The futures market is essential to a producer’s need to hedge against the actual commodity that they hold in their warehouse. In the paragraphs to come I will discuss the differences between cash markets and futures markets, and their advantages as well as disadvantages.
There are two basic options that exist for producers who want to forward price: forward pricing through cash contracts, and forward pricing directly through the futures market. Producers have commonly used the cash contracts, but did you know that only 5% of all farmers in the US use the futures market directly? Why would this be? Are cash contracts that much better than the futures market? Probably not; the real reason lies in a lack of knowledge.1
Let’s take a brief look at the advantages and disadvantages of forward pricing in the futures market vs. forward pricing through the cash market. Perhaps the most important point to keep in mind when discussing cash contracts and the futures market is that each time a contract is offered to a producer, someone is making that contract available by using the futures market. Because of this, cash contracts – at any point in time – will usually be less in price than a forward price in the futures market. By using a cash contract, we are paying someone else to forward price in the futures market for us.
Another advantage offered by using the futures market as compared to cash contracts results from the added marketing flexibility offered through the futures market. You can usually offset your contract at any time, meaning you do not have to deliver on the futures contract. With cash contracts, however, you are locked into delivering the amount of product at the price specified. This can create problems when crops fail to meet contracted levels or when potentially profitable copper prices must be passed up because of the fear of over-contracting.
Of course, all is not gravy in the futures market. Some of the disadvantages include the need of putting up margin money (good faith money required in order to trade futures contracts), the complexity of the market, and the understanding required to trade contracts. Another disadvantage is the inability to lock in an exact price (the price relationship between futures and cash markets, called basis, will fluctuate within a small range making a precise determination of forward prices offered impossible). Also, many producers desire to price less than the minimum standard contracts called for in futures markets. An example of this problem would be the producer with less than 25,000 pounds of copper (smallest copper futures contact) or 44,000 pounds of aluminum (smallest aluminum futures contract).
Trading in futures and options involves a substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.
1 Pricing Georgia Farm Products Through the Futures Market – John McKissick and Steve Turner
The Energies Pit Review For August 30th
It was a big turnaround for the energy markets especially in crude and the products as GDP numbers came in a bit better than expected in Q2 at 1.6% to help thrust energies higher. Crude oil is a very odd bird right now with all the structured trades pointing towards a sell off but it has surpassed $75. The WTI spreads have come off significantly trading at -105 and -110 in Oct/Nov and Nov/Dec respectively. The arbs have gotten hacked too with the Oct arb trading -150. Still this market is strong enough to bounce off the $70.50 support level. This week should be interesting with the non farm payrolls coming out. I think rallies need to be sold into.
Natural Gas had a tough time last week as this market got pummeled below $4 on the NYMEX. Inventories are very weak and this is the time of year when natural starts to sell off so look for this market to try and consolidate around the $3.60 level before heading any higher.
The Energies Pit Review For August 30th
By PitGuru Daniel Cronin
It was a big turnaround for the energy markets especially in crude and the products as GDP numbers came in a bit better than expected in Q2 at 1.6% to help thrust energies higher. Crude oil is a very odd bird right now with all the structured trades pointing towards a sell off but it has surpassed $75. The WTI spreads have come off significantly trading at -105 and -110 in Oct/Nov and Nov/Dec respectively. The arbs have gotten hacked too with the Oct arb trading -150. Still this market is strong enough to bounce off the $70.50 support level. This week should be interesting with the non farm payrolls coming out. I think rallies need to be sold into.
Natural Gas had a tough time last week as this market got pummeled below $4 on the NYMEX. Inventories are very weak and this is the time of year when natural starts to sell off so look for this market to try and consolidate around the $3.60 level before heading any higher.
James' Mound Weekend Commodity Review for Sep 19th
General Comments
I believe a major stock and commodity collapse is likely within the next 10 trading days. Take advantage of the early in the week commodity rally to develop short positions. The momentum escalation in many commodity markets sets up a spike high top and strong price correction. This anticipated volatility to the downside offers numerous opportunities to play put premium spikes in key markets like gold, silver, sugar, cotton, corn, soybeans, cattle and others.
Energies
Crude oil’s recent choppiness goes contrary to recent gains in commodities as well as the stock market. In particular there is a clear divergence between copper and oil prices, which offers a glimpse into the China component. This suggests that some premium is being taken out of the market from a lack of Gulf hurricanes and overall stable inventory levels. A strong punch in the gut to commodity prices will likely be all she wrote for the big 3 in the energy sector and a move to the low $60 range in crude oil is expected. Natural gas remains divergent and the recent bump off channel support on the Oct. contract may be the beginning of a bull run.
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The Weekend Commodities Review
A Market Review and Opinion Report By Head Analyst James Mound
For the Week Ending September 19th, 2010
General Comments
I believe a major stock and commodity collapse is likely within the next 10 trading days. Take advantage of the early in the week commodity rally to develop short positions. The momentum escalation in many commodity markets sets up a spike high top and strong price correction. This anticipated volatility to the downside offers numerous opportunities to play put premium spikes in key markets like gold, silver, sugar, cotton, corn, soybeans, cattle and others.
Energies
Crude oil’s recent choppiness goes contrary to recent gains in commodities as well as the stock market. In particular there is a clear divergence between copper and oil prices, which offers a glimpse into the China component. This suggests that some premium is being taken out of the market from a lack of Gulf hurricanes and overall stable inventory levels. A strong punch in the gut to commodity prices will likely be all she wrote for the big 3 in the energy sector and a move to the low $60 range in crude oil is expected. Natural gas remains divergent and the recent bump off channel support on the Oct. contract may be the beginning of a bull run.
References
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The Energies Pit Review
For the week of September 27th, 2010
By PitGuru Daniel Cronin
Somewhat strong week for the energy markets as Crude Oil closed out above $76 as the S&P rallied to above 1140 breaking key 1130 resistance. The market is seeing a strong rally in the wti spreads and arbs as Nov/Dec is now above -100 and the Nov arb is above -200. These spreads have rallied for three straight days now and this is having a major effect on keeping the flatprice afloat in the Crude market. Another bullish sign is the Euro/USD as this market is above $1.33 and climbing. It will be interesting to see how the inventory report fares this week. If supplies suddenly drop I believe you will see November Crude test $80.
Natural Gas had a great week as the November contract was trading above $4.00 and looks healthy enough to continue a rally. Supplies came out in somewhat of a positive fashion on Thursday and I think as the October contract expires the market will see November move in an even higher direction.
References
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The Weekend Commodities Review
A Market Review and Opinion Report By Head Analyst James Mound
For the Week Ending September 26th, 2010
Energies
A significant decline in oil prices is anticipated over the next 5 days, sparked by a selloff in the euro. Look to capitalize on this with a short term put play. Natural gas must break above the highs from September 16th in order to establish a bull trend.
References
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The Energies Pit Review
For the week of October 4th, 2010
By PitGuru Daniel Cronin
Crude Oil did it last week, rallying from the mid $75 range up over $80 as good economic news came out and the inventory report showed a draw back in crude supplies. Crude now above the $80 mark to $81.50 and I think you may see a bit more of the upside this week but there is huge resistance at $83.50 that traders need to be aware of. Look to get out of longs around this level as this market will likely hold. Gasoline and Heating Oil also following suit higher and this trend will likely take a pause this week as well. WTI spreads are starting to come off their highs here with Nov/Dec trading around -110 after getting up to -92 on Friday. Big economic data coming out on Friday with the non-farm-payrolls so watch this number carefully as the last two numbers have been very weak.
Natural Gas still trading range bound between $3.65 and $4.10 as this market tries to make up its mind on where to go next. Look for $3.65 to show great support but ultimately the inventory report will be the tell tale sign again on this market. Look to pick up some calls as the market gets into the support of $3.70 this week.
References
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The Weekend Commodities Review
A Market Review and Opinion Report By Head Analyst James Mound
For the Week Ending October 3rd, 2010
General Comments
Last week did not offer the timing I anticipated for an industry wide commodity and stock selloff as economic and energy inventory data helped to spike the stock and energy markets. The dynamic that I see, however, has not changed and therefore I continue to anticipate a massive price correction in the very near term in stocks, energies, grains, meats and softs. The dollar is a screaming buy and should rally rapidly to 83 before month’s end.
Energies
Dead wrong on oil last week, so no sense sugar coating it. The market spiked on bullish inventory numbers, a declining dollar and strong economic data. Overall, crude oil and its derivatives are in a bull breakout, one that I expect to be short-lived due to a U.S. dollar reversal. Natural gas continues to play counter trend to oil, an interesting divergence that should help it to rally amid an oil reversal.
References
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The Energies Pit Review
For the week of October 11th, 2010
By PitGuru Daniel Cronin
Crude Oil traded up to the huge resistance at $84.50 on the NYMEX last week as equities continued to rise along with the weakness in the USD. The bank of Japan lowering interest rates was a huge catalyst for all markets worldwide and this cause a spike up in commodities. I believe this is where you need to develop a short position as the market has rallied some $10 in the last few weeks and is overbought up here. The S&P climbed to 1160 but still with 9.6% unemployment it still seems hard to fathom why the Crude market was up to $84.50 in the first place. Look for $80 to be tested again this week as profit taking will occur.
Natural Gas has been looking pretty bearish these last few weeks trading in the lower end of the range at $3.60 with inventories coming out last week higher than anticipated. I would wait to dip back into this market until the $3.60 level looks like it can hold for a few more weeks. If this market gets below there then I believe $3.45 is definitely within reach.
References
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The Energies Pit Review
For the week of October 18th, 2010
By PitGuru Daniel Cronin
Energies had a bit of a steady week last week but settled on the downside of things at $81.25 in Crude Oil as traders started taking profit with the market looking to roll over below $80. This $80 level still offers great support and will be very tough to break as very weak news needs to come out to hit this market hard here. The S&P was up to 1175 and the Euro/USD traded above $1.41 although I think the market will see these trade lower as well. WTI spreads have stalled up here at the -6 level and are also looking to take profit. Look to still sell any rally in Oil here as $84 still holds great resistance with the downside looking like more of a play to me for right now.
Natural Gas still getting knocked backwards with the soaring inventory levels and the weak demand as this market now trades below $3.50 to $3.45. Still room left on the downside for sure as the market could test $3.25 even by this week if profit taking continues in other energy market products. I believe Natural Gas should not be played from the long side yet as there is still downside to go.
References
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The Weekend Commodities Review
A Market Review and Opinion Report By Head Analyst James Mound
For the Week Ending October 17th, 2010
General Comments
Last week I released my 4th Quarter Commodity Outlook and a special report that forecasts the imminent collapse of gold and silver. The report is 30 pages of market analysis covering energies, softs, metals, grains, financials, and meats. It is still available for 50% off by visiting http://commodityoffers.com/mega-forecast4.html - the offer expires October 18th.
Energies
Crude oil is going to be heavily dependent on the U.S. dollar as it is dictating foreign demand. Supplies are one thing, but a dollar rally is likely to thwart near term supply concerns. The dollar bounced ahead of key trendline support and appears to be changing its very bearish trend to a potential bull run, which I expect will top crude oil and bring strong selling through the end of October. Natural gas remains a long term buy with straight calls to play a volatility pop, and is a good spread against short heating oil (1 to 1).
References
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The Energies Review
For the week of October 25th, 2010
By Daniel Cronin
Well, here the market is, back in the middle of the range again as crude oil is trading at $83.50 after trying again to test the lows of $80. Crude Oil did fall below $80 briefly last week only to climb back as equities were called higher and the Euro rallied against the USD. WTI spreads lost some momentum last week as well with Dec/Jan losing steam and also in the back of the curve with Dec10/Dec11. The USD's weakness is a huge factor to the oil price rally and I think that the market will see another downward leg to $80 as technical numbers are again going to be tested and held on the upside here with Crude's $84 level and The Euro/USD's $1.4150 level. Look for Crude to try and first rally up to $84 but get sold off and eventually test $80 again on the downside.
Natural Gas with another disappointing week as the market came off to $3.30 on the NYMEX as another inventory report came in weaker than expected last week. This market has been hammered ever since breaking $4.00 on the downside and just hasn't really found any legs to bottom out yet. I still think this market has room to move downward. Next stop could be $3.15.
References
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The Energies Review
For the week of November 1st, 2010
By Daniel Cronin
Crude Oil still stuck in this trading range but after this week the market will have much better direction on where it wants to go after the FOMC meeting and the non-farm payrolls at the end of the week. Crude has been stuck between $80 and $84 for the last month now but speculation over the weekend led that the Federal Reserve will announce another round of credit-easing measures to help spur growth in the U.S helped the Euro rally and crude as well above $82 per barrel. WTI spreads have gained in recent days and so has the market down from support at $80.50. I believe the market will rise up to the resistance of $82.70 today before any news comes out, and then it’s all fair game from there. $84.50 definitely can be tested if credit ratings ease even further so keep an eye out for this number.
Natural gas has been on a real surge since the November contract came off the board. December Natural is now above $4.08 looking to test key resistance of $4.10 as this market has shot up since consecutive inventory reports have come out better than expected. This market looked to be headed to $3.00 but after the depressed November contract went off the flood gates opened up and buyers came in chomping at the bit to get a piece of the market. For now it needs to see a nice close above $4.10 to continue momentum.
References
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The Energies Review
For the week of November 15th, 2010
By Daniel Cronin
The energies had a great start to the week, rallying to new two-year highs in Crude Oil as prices surged past $88 per barrel but faltered in the later stages of the week as growing concerns over debt crisis in Europe popped back into the mix as Ireland is now under scrutiny. This led to a fall in the futures and global stock markets and Crude Oil fell to the huge support of $84.50 which was at one point huge resistance in this market but has since made way for great legs to stand on. Even as the Euro weakens against the other major currencies and the USD continues to rise, the price of these energies have remained positive which has been very odd to see as this has not been the usual scenario. I believe that this $84.50 is great support and one will see the flatprice bounce off this level to trade at $86 before the inventory reports come out this week. The market has been getting some bullish numbers the past few weeks and I don't think this will be any different.
Natural Gas had a roller coaster of a week first rallying in Dec to $4.20 only to lose all of its gains as inventory reports come out bearish Thursday to trade down to $3.75. This market looks to enjoy a nice support line at $3.60, however, and I believe it will be reaching $4.00 before $3.60 just based on technicals in this market. I like Natural Gas at this $3.80 level and would recommend looking at some long term OTM calls.
References
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MoundReport Weekly Review for November 14th, 2010
General Comments
The commodity correction appears to have begun, a little later than anticipated, but with enough volatility to indicate the move is underway. The vertical momentum (or velocity of decline) is just beginning to expand, setting up further declines in potentially shocking intraday price moves – most notably started by markets like oil, soybeans, sugar and coffee.
Energies
Crude oil’s plunge on Friday is indicative of the spec and fund selling I expect to see increase as the stock market declines and global economic outlook weakens. The energy sector as a whole piggybacked the commodity inflation boom of the last few weeks, but fundamentally lacks the geopolitical concern or supply issues that would justify such high prices. Oil is likely in a long term consolidation phase, having topped below $150 and above $32. The market is testing the upper inside range, and I expect it to fail all the way to $55 or lower. Natural gas remains a long term call buying opportunity to play the volatility pop to the upside.
References
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The Energies Review
For the week of November 22nd, 2010
By Daniel Cronin
Energies had a less than stellar week as Crude fell to $81.98 which was down 4.9% for the week in the January contract as Ireland's debt crisis moves into full swing in the Eurozone. “Energy prices also fell at the end of last week after China ordered banks to raise reserves in a move that may slow growth and crimp fuel demand in the world’s largest energy-consuming country.” (1) WTI spreads, however, rallied in the front as Jan/Feb - which is now the spot spread - rallied up to -59 and the Jan arb, which fell to -300 on Friday’s trade rallied up to -250 before the weekend set in as traders started to profit take on this from the short trade that occurred from -90 to -300. Look for opportunities to sell on the rally in January somewhere above $83 to $84 as crude prices will likely gravitate toward the $80 level as the S&P continues its slide below 1200. I believe OTM Puts will be a nice play as the market looks to head lower as hedge funds cut their long bets on the price of crude.
Natural Gas had a wonderful ending to the week as inventories were much better than anticipated on the Thursday session and December contract spike to above $4.10 signaling a bullish trend for this market. I think pull backs below $4.00 should be bought as Natural is now finding a nice base at $3.70 and looking to consolidate a bit more before moving even higher.
References
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Pitguru's Engergies Review for Nov 29, 2010
By Daniel Cronin
Energies are called slightly higher to start the week at $84.35 in crude oil after consolidating at the $81 level in the January contract. The Europe debt crisis is back in swing with Ireland having major problems and Portugal and Spain heading into the same mix sending the Euro/USD below $1.33. With this, one would think that crude oil would have broken down below the $80 mark. Yet this market stays resilient above $84. I would suggest looking at the OTM calls in January contract as this market seems way overpriced for the economic conditions right now, especially with rising inventories last week.
Natural gas had a very nice comeback from below $4 levels to trade at $4.30 on the Nymex as the January contract looks to flourish as spot month. Inventories, although very high, have been posting better than expected numbers for consecutive weeks and look to continue this trend. Look for $4.50 to be great resistance for now but if the price does drift towards $4 this could be a very good opportunity to pick some contracts.
References: >>>Pitguru Weekly Review
The Energies Review for Dec 6th, 2010
By Daniel Cronin
The market got bad employment news last week with non-farm payrolls data. The national unemployment rate moved to 9.8% and supplies increased in Crude Oil and Cushing Oklahoma, yet the energy markets made new yearly highs as Crude blasted through the huge resistance of $88.50 to above $89. Very interesting what is happening in the back end of the curve as Cal 12 Cal 13 went out of control as spreads went higher and higher. This is almost reminiscent of 2007-2008 when spreads went bid for in the back of the curve as now Dec11/Dec12 gained +90 cents Friday to +97. Dec12/Dec13 gained almost +105 as this market rallied to +115. The backwardation has really started to kick in and if one can remember back to the 2008 year once these spreads did that $90 crude was easily obtained. However, past performance is not indicative of future results. No matter what’s going on fundamentally, I think this market will likely continue to move higher as it has passed resistance. Look for $90 to $92 this week in Crude.
Natural Gas had a great week rallying to $4.34 in the January contract on better than expected results from inventories and in my opinion, this market is probably headed higher. I believe Natural will break the resistance of $4.50 this week to confirm the upside move.
References
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Energies - December 13, 2010
By Daniel Cronin
OPEC has kept inventories levels unchanged this weekend as prices stayed relatively unchanged last week with a range of $90.70 to $87.50 a barrel on the NYMEX. “OPEC has maintained a production target of 24.845 million barrels a day since December 2008, the longest period that quotas have stayed unchanged since they were first used in 1982. The 11 members with quotas pumped 26.7 million barrels a day last month, 1.9 million more than targeted.” (1) The news of the unchanged supply increase will lead to higher future prices this week as the only change members were considering was to tick up inventories as the price of Oil has gained nicely for the Saudis. Equities have been making new yearly highs with the DOW now over 11,400 and climbing. This, with the OPEC news, will likely send prices over $90 this week as the strength in this market will continue. WTI spreads have stayed relatively steady after the dip last week as f/g trades -54 and g/ trades -48. These have actually been on a bit of a decline coming down from -35 but still hanging around the -50 area in the front. Dec11/Dec12 found support at +52 and has bounced back up to +81. January Arb still very weak as brent continues to be the leader with Jan wti vs brent trading right at the support of -3.00. I might look to be a buyer of some OTM calls or try and get in on flatprice below $88 because $90 will be coming up again very soon in my opinion.
Natural Gas making the charge up again after last week’s decline on weakening inventory levels as this market closed above $4.40. Natty was having a great ride to above $4.60 levels but plummeted -20 cents on a bad inventory number on Thursday. This market quickly got its legs underneath it and now looks to be headed back up to $4.50.
The Enegies Review For the January 3, 2011
By Daniel Cronin
Crude Oil had a sharp spike to end the week as it rallied +$2 to close above $91. It looks to me like the start of the new year will have a bit of a spike to it as I believe Crude will retest the $92 level area. WTI spreads are falling hard this morning as G/H trades below -90 with the front arb getting very weak right now. It is odd that these conditions are happening in a rallying market. Look for $92 to be broken this week.
Natural Gas had a great week last week rallying from $4.00 to trade up to $4.30 and I believe this market will move higher as well. The 50 day moving average is rallying and will cross the 200 day moving average within the next month, and I see this as a bullish sign for longs. This market will likely look to test $4.50 this week.
References
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The Energies Pit Review For January 10th, 2011
By Daniel Cronin
Crude Oil came off from the highs of $90+ to the big support at $87 last week as there was a pool of buyers at this level playing the technical game. The fire in the Canadian Oil facility on Thursday really bolstered the market as wti spreads went from -140 to -95 in Feb/March and March/April went from -120 to -75 as traders bought up the front month contracts in fear of a supply shut down. There was also another scare at Prudoe Bay, an oil line leak happened Sunday night and this had the same reaction as the Thursday scare. Spreads have since calmed down from the highs however as G/H trading -115 with H/J -96. I look for Crude to test the $87 level again with this being great support. Trading range should be $87 to $90 but I am looking for more of a test to the downside.
Natural Gas still looking very healthy above the $4.40 level as prices are now consolidating here waiting for the next move higher. The technical indicators look bullish here with the golden cross set to happen very soon. I would be playing the long side and look to buy a dip below $4.30 in the $4.0 area if at all possible.
References
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The Energies Review For the week of January 24th, 2011
By Daniel Cronin
Crude Oil had a bit of a turnaround last week as investors and traders alike sold the energy sector on profit taking and higher inventory supply as the March flatprice come off to $88. This is very key support here at the $88-$87 level so look for prices to stop here first and then figure out where it will go from here. With the selling of the WTI spreads in the March-April now going below -150 and the arbs (wti vs brent) in March looking to head to -10.00 I would say the flatprice wants to run south for now. After $87 the next big support level I see is $82.
Natural Gas continues to make headway and is at its highest point of the year so far at $4.75 as this market looks poised to get to $5.00. This is being propelled by the bitter cold the Northeast is having the last few weeks. I like this market to keep going higher and I believe any pullback should be bought here as prices look very healthy above $4.50.
References
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The Energies Review For the week of February 7th, 2011
By Daniel Cronin
I think traders needed to fade the rally in the flatprice and spreads last week as there was a big premium put into both flatprice and spreads with the geopolitical tension in Egypt being lowered as Mubarak said he will not confirm run for office. H/J traded up to -200 where it met huge selling pressure to put it down where it is now at -290. March wti traded above $92 only to get slammed down to $88 where there is huge support. This week I look at opportunities to buy on the dip as support in flatprice is at $87 to $88 and will move to over $90 as the mess in Egypt is still not over. Wti spreads continue to get beat down and I look for opportunities to be short these heading into next week. The roll starts this week and I believe spreads should continue to get weaker.
References
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The Energies Review For the week of February 14th, 2011
By Daniel Cronin
Crude Oil had a whipsaw like week that saw the flatprice move between $85 and $88.50 as Mubarak was playing musical chairs with his presidency, sparking rallies and sell offs alike. March crude, which only has a few days left to trade, is below $85.50 but most everything else in the space is up as the contango steepens in the WTI spreads. H/J crude is now below -30 and looks to continue to slide here as some have suggested a test below -400 by the end of expiry. The April/May is also very weak as this is below -340 and I would like the play to sell this as I believe this spread will reach new lows. I think the back end of the curve from June out is a buy this week as the contango appears too powerful in the front to try and get long there. Look for a hold of $84.50 in March as the week closes out.
Natural Gas has had a bad losing streak as March Natty is now below $4.00 with the oversupply this market has. I believe that prices are in an area that appears oversold and I think it could be picked up just on technical support right now. Look for long opportunities in the April contract somewhere between $3.96 and $3.90 as Natural Gas could once again test the $4.00 mark.
References
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The Energies Review For the week of March 7th, 2011
By Daniel Cronin
Another week of rallying energy prices continued as tension in the Middle East, a falling dollar, and rising Greek debt issues fueled the fire under crude prices. Fighting increased between Libyan rebels and troops loyal to Muammar Qaddafi, reducing the nation’s crude-oil output by as much as 1 million barrels a day. (1) The contango in the wti vs brent contract is still in effect but rallying here as the April arb now trades at -$11.00. WTI spreads in the front still higher as traders gobble up the front month contracts here with May/June now trading -50 and the June/Dec looking to go backwardated. With the USD falling and still fighting in Libya this Crude market will likely continue to rise and $110 is next on the horizon.
Natural Gas continues to slump now below $3.80 in the April contract as continued supply increases sell this market off. If this market gets below $3.70 which is great support then it could be headed for lower lows here on the NYMEX, even with every other energy moving higher.
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The Energies Review For the week of March 21st, 2011
By Daniel Cronin
Crude had a very wild ride last week selling off to $97 in May only to come back +$7 as bombings began in Libya over the weekend. The USD has broken the $1.40 barrier on the Euro/USD and this is adding to oil's gain as May crude is up to $104. Traders need to pay special attention to the Middle East as this is a very sensitive area that can quickly turn the market either way with each fresh piece of news that comes out. Of course, the story in Japan must not be overlooked with the radiation in the nuclear facilities still causing problems. All of these factors are leading towards a rallying oil price and I believe will continue into this week so look for resistance in May crude oil at the $108 level. If this should break the market may be off to the races again.
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The Energies Review For the week of March 28st, 2011
By Daniel Cronin
Crude Oil had a very dull week as traders were watching the headlines waiting patiently for any news to move the flatprice in either direction but to no avail as May Crude stayed around $105. I believe this week there will be a liquidation in the flatprice as the oil price has at least $5 of premium in it right now and many traders and analysts will likely start to get impatient and sell off positions here. I will look to get into OTM Puts as I believe the price of Oil could get back to $100, if not lower. Natural Gas had a very good week rallying above to $4.50 in the May contract and I believe prices can be held up with potential support around $4.30.
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The Energies Review For the week of April 4th, 2011
By Daniel Cronin
A bit of role reversal in the energy market last week as crude had all the making of liquidating with a bearish DOE numbers of +2 million barrels that sent this market to $103.50, but a quick reversal of flatprice came about and has sent the crude oil market past resistance of $106 to trade at $108.50. This is a huge number that was broken to the upside and now crude oil is off to the races higher as $110 is well within reach in my opinion. Gasoline has roofed to $3.15 a gallon and I think you can be sure that prices at the pump will eclipse the $4.00 mark this week or early next. This rally in the price is definitely not a good thing here and consumers will be in danger if crude eclipses the $110 mark which it looks like will happen. Still keep an eye out for any news out of Japan and Libya, but for right now I feel it’s rally time in the oil market.
References
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The Energies Review For the week of April 25th, 2011
By Daniel Cronin
Crude oil had another positive week climbing up to $112 a barrel after liquidating down to $106 earlier in the week. There seems to be a range bound territory right now with the WTI from $116 to $105.50 and I would look for this trend to continue with Crude grinding higher ever so slightly. The Euro/USD rallied to the upside (weak USD) as this market broke out above $1.45 to the upside and this has been the weakest the market has seen this so far this year. Gasoline at the pump has now risen over $4 and is inching higher to the $4.30 mark. This is putting a huge burden on consumers and will probably force some to not take far vacations this year. The Crude market finally saw a drop in supplies which added a bit more fuel to the fire. I am looking for $116 to be the resistance this week but the market, grinding the way it keeps on, is likely headed a bit higher after breaking this number.
References
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The Energies Review For the week of May 2nd, 2011
By Daniel Cronin
Breaking news over the weekend as Osama Bin Laden was killed by US forces, this news coming out on Sunday night as Crude came off to $110.80 before rallying back to $112.40. This is a major headline as it took 10 years to capture Osama but now it is finally done. The war on terror can slowly be chipped away now. I believe this will have a negative impact on the price of Crude Oil and the market should see lower prices on this huge news. There was a big premium on the price of Crude because of the war on terror, and I feel this should be cut significantly now. I will look for Crude to test $110 and then $105 for the next support.
References
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The Energies Review For the week of May 9nd, 2011
By Daniel Cronin
Energies came off very hard last week, almost $18 in crude alone in three days as length got liquidated form the market as there were many sell stops below the $105 mark in the WTI. I think this is what the economy needed as gas prices were soaring above the $4.00 mark so a good sell off will potentially take some of the burden off of US consumers. I am looking for crude to try and regain form above $100 and I see this market testing $102 this week. The USD gained significant strength from $1.49 to $1.43 versus the Euro so look for this to get a bit of a pop as well with a weaker USD.
References
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The Energies Review For the week of May 16th, 2011
By Jurgens H. Bauer
Crude oil remained rather steady last week with all of the big moves the market has seen, closing under $99 as the main story was the Euro weakening against the USD. The Euro/USD closed under $1.4105 as commodity prices around the world kept on falling. Gasoline prices fell huge last week after supplies increased and was limit down one day. Gasoline now trades around $3.00 with retail gas potentially falling below $4.00 soon. This will take off the huge burden for consumers here as the price has steadily been decreasing the last two weeks. I am also looking for oil to trade from $96 to $101 this week with the downside being tested more. I believe $94.50 is huge support in this market so watch out for that level.
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The Energies Review For the week of May 23rd, 2011
By Daniel Cronin
The energy market had another week of testing the support of $95.00 in the flatprice as the market traded a bit sideways with a test of the low end on the NYMEX. As reported on Bloomberg, news over the weekend about European debt concern arose again with Greece as Greek Prime Minister George Papandreou is scheduled to brief his Cabinet this week on budget cuts and asset sales to keep European aid. Greek government bonds plunged May 20, driving 10- year yields to a euro-era high, on speculation the nation won’t be able to avoid reorganizing its debt. The spread, or yield difference, between the 10-year bonds and similar-maturity German bunds widened to a record. Fitch cut Greece’s credit rating to B+ from BB+, four notches below investment grade. (1) This will likely have a huge effect on the market with the Euro/USD going to test $1.40 and no doubt a sold off equity market. I will look for crude to again test $95 as the market heads into the new week on this news.
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The Energies Review For the week of June 6th, 2011
By Daniel Cronin
Last week saw crude oil try and rally on the NYMEX but got stopped in its tracks above $103 as the Case Schiller Index dropped to its lowest in 10 years and unemployment rose. Crude has been stuck in a range from $95 to $103.50 for the last few weeks now and it looks like the downside maybe tested again with all the bad economic data coming out recently. The July arb is now down to -1560 and I think it is looking to go below -1600. The Euro/USD recently rallied giving other commodities a boost but not the oil market. The sense is that $97 is an area that will be looked at soon. Natural Gas continuing its great run here and just might have broken out with trades above the resistance of $4.75. This market had a strong inventory report last week to send prices higher. $5.00 is still huge resistance in my eyes.
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The Energies Review For the week of June 13th, 2011
By Daniel Cronin
Crude Oil having a tough time advancing through the resistance of $103.00 last week and with the actions of the stock market going lower, crude fell too, down to settle just above $99 as it closed out the week. The weakness in the equity market is a bearish sign for crude. What’s also very bearish is the arb markets and how much they have fallen in the last week. The July arb now trades -$20. That is unbelievable to me. Brent crude has a $20 premium to the WTI. Brent has taken over as the benchmark for crude oil and this is having a negative effect on the flatprice. Also, WTI spreads are lower as well. These factors are looking to a continued downtrend and wti will try and test that $95 level again soon as there has been a triple bottom there now.
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The Energies Review For the week of June 20th, 2011
By Daniel Cronin
The energy markets have broken significant lows last week and I think they are looking to head lower this upcoming week as the USD strengthens and the S&P falls once again. Crude Oil fell below the triple bottom of $95 and is now at $92 in the Aug contract trying to head lower as major players got stopped out of the market below this $95 level. WTI spreads after the first 6 months have really gone down with Dec11/Dec12 now as low as -250. The Arb markets are coming back in line as Aug Arb trades down to -20 again after rallying to -17 last week. I will look for Crude to test the $90 mark, and I believe this could be done very soon in the week. Natural Gas lower after getting above $4.90 the last few weeks as this market is now $4.30 after a big supply number. I will look for Natty to trend lower to $4.10.
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The Energies Review For the week of June 27th, 2011
By Daniel Cronin
Crude Oil had a huge week as President Obama ordered millions of barrels unleashed into the open market sending the price of WTI below $89 at one point. The news happened very suddenly and very fast as crude dropped from $95 to $94 in afterhours trading, then dipped below $90 that same day as the oil markets are whipping around. The huge news has been the drop in the Brent flatprice as Aug Brent now trades below $105 looking to test $100. The arbs have really rallied of late with the Aug arb now above $14 after being as low as $21. The Brent spreads have also played a major role in the liquidation as they have moved significantly lower in the last few trading days. The Z/Z Brent, which had been +225 just last week, has fallen more than -$3 to now trades at -100. This move has been colossal and the whole market has had a tough time reacting to this. It’s been like the flood gates have opened up and everyone is selling Brent spreads. Look for the selling to continue on this week as boxes get stronger coming back from their lows. Crude has now seen a low of $89.70 twice now. This is a very huge support level and if this gets broken the market could see lower lows as the sell off continues. I will look for $89.70 to be pivotal price in the coming week ahead.
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The Energies Review For the week of July 11th, 2011
By Daniel Cronin
The energy market had a very interesting week with the crude oil price rallying above $96.00 resistance and getting to $99 before falling back heavily on the weak job report on Friday. The equity markets rallied to new heights this year over 12,700 in the DOW until Friday’s glum report as Crude sold off hard and down below the $96 level. This is very critical as the resistance now becomes potential support so watch closely for any close below this level. If a significant downshift is in the market below $95.50 this will confirm the downside and I expect to see $94-$92 this week. The USD has had a significant rally from $1.46 to $1.42 in the Euro/USD and this market is looking strong as well (strong USD) so this points to a lower energy price as well. The arb market has completely collapsed again with the Aug arb trading -22.00, all time lows for this market. With all of these factors coming into play it looks to be a down market for the energies this week.
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The Energies Review For the week of July 20th, 2011
By Daniel Cronin
The energy markets had another up and down week with the crude markets falling to $94 and rallying as high as $99 as the US equity market slowly came off of its highs of the year. Crude has now had a range between $90 to $99 with great resistance at $99 as the market has failed twice to get beyond this level. With the credit rating on the US in jeopardy and Euro having trouble on its own with defaults it seems likely that crude has more room on the downside for right now and will look to head lower this week. The USD has risen sharply and is now under $1.40 in the Euro/USD. I would look for more pressure to come on the Euro as countries keep needing to get bailed out. The products have held up quite nicely as both heat and gas cracks are trading around $34 right now. I believe one may see a breakdown in the products as these are usually the first to go in a downward market. Look for the products to come off of their highs and this will lead crude lower.
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The Energies Review For the week of July 25th, 2011
By Daniel Cronin
Crude oil lifted above $100 briefly at the end of the trading week last week as supplies decreased and the Euro rallied to over $1.4300 in Euro/USD. The crude market has held up very strong even as the debt ceiling crisis looms over the market here. WTI spreads in the front and back have been very strong with Z/Z crude oil rallying to over -290. The products including gasoline (RBOB) have been sold recently into this rally as the gas crack has come off $4 the last week. I will look for WTI to come off as the uncertainty around this market continues ahead of the debt decision. With gasoline faltering, and the big news ahead next week, I expect Crude to test the $97 mark as investors sell in front of the news.
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The Energies Review For the week of August 1st, 2011
By Daniel Cronin
Last week the market saw crude close out relatively flat with a run to $100.60 and then a dive back to $95.70 as investors anticipated the debt ceiling issue. Well, good news for the markets as the issue seems to be resolved for the moment with Congress coming up with a plan to raise the debt ceiling as the S&P opened up +16 on the overnight Sunday session. Crude looks to be headed higher for the beginning of the week but I believe OTM puts could be purchased here as crude will likely drift lower after the news settles in. Arbs have gotten crushed again with Sep now -22. This is the lowest it has been ao far and a good indicator of the downward pressure being put on wti.
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The Energies Review For the week of August 8th, 2011
By Daniel Cronin
Huge sell off in the energy markets as the debt ceiling agreement was a moot point as traders rushed to sell in the $94-$98 range and then the market tumbled on the news that the US will lose its AAA rating. This sent the markets into a free for all as Sep crude broke huge support at $90 to trade down $83.40, right where it is right now. Fear swept the market at the end of the week with the huge liquidation and this will likely continue into the weekend. $83.00 is huge support on the downside and if this does indeed get breached then the WTI will be in a for a rude awakening as traders will rush to sell at that critical point.
Natural Gas is in a huge decline now below $3.90 in Sep as this market is getting on shaky ground down here. With consecutive reports of high supplies and the economy the way it is right now, natural gas may be in for some trouble if it heads lower than $3.70. This market has been in a nice range from $3.80 to $4.75 so these levels are critical for the natty this week.
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The Energies Review For the week of August 15th, 2011
By Daniel Cronin
The oil market saw a bounce back in price last week as the markets were oversold below the $81 dollar range in Sep WTI. September crude closed out the week at $85.38. The equity markets got a bit of relief as the S&P rallied back over 1150 and the DOW over 11,000 and WTI pushed higher from $78.50 at one point getting as high as $87. The back of the curve rallied huge with Dec11/Dec12 crude oil going from -520 to -360 as many banks were buying up the back of the curves in both WTI and Brent. I believe this week is a week to take any unrealized profits from longs at $80 as I feel the market may head lower after the "dead cat" bounce it has just seen. I would look to get into some OTM puts as this market has potential to drift lower this week.
Natural Gas teetering on the $4.00 mark again here as prices shifted higher last week above $4.15 but have since dropped with the abundant supply. Look for NG to drift south of $4.00 and into the $3.90 range. Good support is at $3.80 in this market.
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The Energies Review For the week of August 22nd, 2011
By Daniel Cronin
The energy market came off hard at the end of the week last week as crude fell from $89 to $81 very fast as the economy still is weak and the equity markets sold off. The Dow is back under 11,000 as turmoil is still rampant. Crude oil, gasoline, and heating oil look to continue lower but I believe $80 will be good support for oil and shorts should think about taking some profit in the low $80s. The market looks to be range bound from $80-$90 here.
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The Energies Review For the week of September 19th, 2011
By Daniel Cronin
The crude oil space saw almost a mirror of the week before. The market high tailed up to above $90 before coming back down to below $86 as the economy still gets weaker with the eurozone crisis. Wti has been pretty much range bound and will likely keep between $83 and $90 this week.
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The Energies Review For the week of October 3rd, 2011
By Daniel Cronin
The energy space is starting to break down on the nymex with last week once again testing the lows of $76 as the world continues to fight fears of another retest of the equity lows of 2008. This market has been very fragile. The Brent contract is at $101 and looks to go below $100 as the futures already point to a lower opening to start the week. With all the buzz about high gas prices amid the sell off one can bet that the gas crack will come in line and head lower as traders sell the rbob contract. Look for the EIA number to be very key this week to try and hold the market above $75 because if bearish numbers come in crude can get further liquidated below that level.
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The Energies Review For the week of October 17, 2011
By Daniel Cronin
The energy markets have rallied very nicely the last two weeks as traders and investors alike buy up the sold off crude markets with equities and the Euro rallying. These markets are almost at the top of their recent highs here with the S&P getting to its double top at 1224 and the Euro/USD edging closer to $1.39. These are very significant levels and if the markets rally and close above here the move to the upside could further be sustained. I will likely look at buying some OTM puts as I believe the markets are overbought at these levels. Crude is trading $88.10 in Nov with $90.50 being the most recnt high and with the G20 meetings lined up very soon I believe this market could head back down. WTI and brent spreads have been rallying very nicely and I believe they too are due for a sell off. Looking for Crude to hold the $89- $90 level for now.
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The Energies Review For the week of October 24, 2011
By Daniel Cronin
What a crazy week it was in the energy markets as crude rallied in the early part of the week to the resistance of $89.50 but fell big on economic uncertainty to $85 along with the stunning news of Qaddafi's death. The flat price is now higher on the Sunday night session to over $85 in Dec CL as this market just does not want to give up. Every time it gets knocked down it keeps getting back up and the $89.50 level is in jeopardy this week. The Euro/USD is looking to creep back up and break the resistance of $1.39 and if it does I believe Crude will try and test $90. The equities markets have broken the old high of 1225 and I believe this could have more to run on the upside. The DOE numbers will be very interesting so look for these coming out on Wednesday. For right now crude is stuck in a bit of range but I believe the price will have look to try and climb higher with all of the major resistances being breached.
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The Energies Review For the week of October 31, 2011
By Daniel Cronin
Huge news over the weekend as the bank of Japan intervenes on the yen causing it to tumble dramatically Sunday night with the yen losing more than -600 points at one point. Crude sold off as well below $93 on the news as most markets were down big. Crude is now in a trading range from $90 to $94 and will look to hold there through this week. Wti spreads have found the footing from last week's decline towards the end and I like buying this spreads in the dip. Keep an eye out for the yen this week as it will dictate how the market will play.
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The Energies Review For the week of November 7, 2011
By Daniel Cronin
Will the euro zone debt issues keep a lid on the rising oil price the market has seen in the last two weeks? Crude again rallied just under $95 as this has been a huge resistance point even though the equity market has been on shaky ground. The new range is $89 to $95 right now as this market continues to bounce around. Wti spreads have been coming off recently and so have the arbs. I believe arbs will continue to fall and Brent spreads be bid for in the coming weeks. $95 will likely be tested again in the oil market before this week is over.
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The Energies Review For the week of November 14, 2011
By Daniel Cronin
Crude Oil has made it to the upper level in the $90s as WTI settled at $98.99 with the rally holding true late in the day Friday in the S&P. Crude had a very nice run since the low of $74.50 a month and a half ago and looks to try and touch the $100 level this week as this is now the next resistance point. Heating Oil has been on fire recently trading up to $3.17 while Gasoline has gotten hammered (a good thing for drivers) trading $2.58 and looking to keep sliding lower. The arbs have broken out of their trading range with the WTI rallying above -16.00 vs the brent in the Dec contract which was huge resistance. This spread looks to tighten as the WTI is staging a very nice rally right now. I would look to play the Jan $100 puts for right now as I don't believe this market should be trading higher than this given the fundamentals of the economy and the fear of the Eurozone crises.
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The Energies Review For the week of November 21, 2011
By Daniel Cronin
Very volatile action in the crude oil markets last week as oil surged past $100 to $103.30 before coming back off on renewed fears of an economic meltdown amid the crisis going on in Europe. If you were able to purchase a put above $100 last week, I'd say now is the time to exit with WTI trading at $95.50. I believe the market will see some stabilization at $94.50-$95.00. Heating oil has finally started to come down a bit as this market still trades above $3.00 while the gasoline is at a paltry $2.50. Look for the RB to HO spread to tighten a bit this week. I think gasoline is just way too oversold.
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The Energies Review For the week of November 28, 2011
By Daniel Cronin
With all of the negative news and conditions around the globe, I think it would be odd to see a rally in the equity market after it has fallen for seven straight days, right? Well, that's exactly what is happening here with the rally of more than 30 points in the S&P and crude trying to touch $100 on the Sunday night session. $95 held for great support in the markets and right now the test of the highs is on its way.
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The Energies Review For the week of December 5, 2011
By Daniel Cronin
Another week, another new recent high in the WTI space as crude rallied to $101.50 to close out the week on increased concern over Iran's crude supplies. The market has really been on a huge wave to the upside. This looks likely to continue as the equity markets have once again found their footing following the downturn ahead of the Thanksgiving holiday. WTI spreads in the back of the curve remain strong in backwardation and the Jan arb has recently moved up again into the -8 dollar range. All signs point to a higher week and the next target will be $103.50.
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The Energies Review For the week of December 12, 2011
By Daniel Cronin
The energy markets took a big dive at the end of last week with fears of the European debt crisis still in full effect. WTI traded from $102.30 down to $97.75 as it closed out the week on a sour note. I do like WTI from $97.50 to $95.00 and would be a buyer around those levels as the market will likely see a bounce during the trading week back over $100.00. Natural gas is still a dog in my eyes and I don't like it one bit down here. Would like to see this market press below 3.00.
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The Energies Review For the week of December 19, 2011
By Daniel Cronin
The energy complex took a dive with the bad news coming out of Europe as both WTI and Brent sank to new monthly lows. Jan WTI crossing below $93.00 and Feb Brent below $103. I believe the markets are a bit oversold here and will look to bounce up this week as the markets quiet down for the holiday week. Look for WTI to trade back above $95.
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