MB Wealth Weekly Commentary: Energies, Livestock, Financials ...

Tag : metal supplies
Energies
The U.S. Department of Energy said that crude oil supplies were up3.0 million barrels last week at 296.9 million barrels, more thanexpected, and 100,000 barrels were added to the Strategic PetroleumReserve. September crude oil dropped $15.88 or 11% to $129.47 topost its largest one week drop in history. The prognosticators failto point out that even with the recent sell off prices are still upover 60% ytd, so we are not out of the woods just yet. Next supportcomes in between $122 and $124 with resistance at $133, followed by$139 on September. We would caution traders to throw in the towelfor higher prices and to shift to a bearish bias as the recentdecline has taken prices to over sold levels and we still would notrule out a trade above $150 in coming weeks to months. For now wewould stand clear until the sell off has fully run its course.
Supplies of gasoline were up 2.4 million barrels and heating oilsupplies were up 1.3 million barrels. Over the past four weeks,gasoline demand was down 2.1% from a year ago while distillatedemand was up 2.5% from a year ago. In terms of price, RBOB was alooser shedding 38.26 cents, or 11% trading to levels not seensince the first week of June. Support comes in at $3.12 followed bythe 100 day moving average at $3.0650. September heating oil lost43.12 cents or 10% and was successful in filling a gap on chartsfrom early June. Significant support comes in between $3.55 and$3.60. We will most likely look
for a long entry in heating oil, but would like to see aconfirmation of an interim low and reversal in both heating oil andcrude before initiating longs for clients.
The U.S. Department of Energy said that underground supplies ofnatural gas were up 104 billion cubic feet last week to 2.312trillion cubic feet, more than expected. Supplies are now down 14%from a year ago and down 2% from the five-year average. Septembernatural gas closed down $1.40 on the week at $10.64, the lowestlevel in three months. Late last week we saw a quick $3 drop andhave now reached the 50% Fibonacci retracement level. With pricesextremely oversold, expect prices to reverse and find their way tohigher ground on warmer than expected weather or a hurricaneforecast. We are pricing out-of- the-money call spreads forSeptember and may probe futures from the long with stops below lastweek