Recently in energy Category

This does not feel like Spring Break to me as I need to be glued to the screens. The good news being I live in Ft Lauderdale it may feel like Spring Break at the beaches this weekend. A small victory today as we had a bearish engulfing candle in oil. As of this post prices are $2 off their intra-day highs. We were lucky enough to buy back our bottom legs this morning when oil was positive and now clients own May $75 puts and should be able to profit on the trade as prices make their way closer to $77/76. $5 put spreads that were bought within the last few session stay put looking for lower trade. It has been a long 5 weeks as natural gas lost another 15 cents this week. We are lonely in this trade as most people doubt we can turn around anytime soon but clients remain long via future and options as they believe as do I that we will be back over $5 within a month. Clients still hold June puts in the ES and SP but as prices closed at a fresh high yesterday we advised them to cut losses on futures. We still think we could get a nasty correction but until the markets tops there is no reason to fight the tape.

Next week will be key in sugar to see if the almost 35% correction was enough to attract fresh buying. We think it was and expect a grind higher from here. Cotton rallied about 2% today; it was too good to be true down all 5 sessions this week. Clients are short still looking for 75/76 cents in May. Corn has been down for the last 7 session but it has only dropped 20 cents in that time frame. We like being long via options and futures and have advised clients to lift all their short hedges. I would favor July options to May and if interested in futures we would trade the new crop December futures. May soybean oil is down 3.5% in the last 2 sessions; another 1-2% and we would look to book profits on shorts. Stay out of cattle's path; April made a new high today lifting prices to levels not seen since the fall of 2008. We feel we are close to a top but like stocks there is no reason to jump in front of a freight train. There will be a time and place to get short and we will advise when but not yet.

April gold traded below $1100 but closed just above that level. We think more down side is likely and currently own NO gold for clients. Likewise with silver we feel we could get some pressure short term. Assuming the recent H/L a 38.2% Fibonacci retracement is $16.40 and 50% is $16.10. The closer prices are to $15.75 the more aggressive of a buyer we would likely be for clients. Copper prices really did not go anywhere but we did close down all 5 sessions this week. We are thinking if we see another leg down here or overseas copper could get hit 10-20%. The dollar closed down for the third consecutive week and ended below the 34 day moving average for the first time since mid-January. If the dollar continues lower look for all the currencies to temporarily gain. We are using the volatility to scalp intra-day for clients in the Pound and Yen. Clients remain short the Loonie via June puts and took some heat today but should be fine in the coming weeks.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Markets seem to waiting for some type of catalyst to determine the direction of the next leg. Inside day in Crude oil as prices hover around $82/barrel. For new entries we still like the idea of $5 put spreads but we would start looking at the June as opposed to May contract. If currently in the May we would try to buy back the bottom leg; we have suggested for clients to buy back their $70 puts and that would leave them long the $75 puts. A disappointing day for longs in natural gas as yesterday could prove to be just a head fake. Clients remain long via April futures and June call spreads as prices were off 2.4% today.

As of this post indices are at the high of the day; we think we are close to an inflection point but we've been wrong for the past 2 weeks. If the S&P closes above 1148 exit short futures at a loss. Fourth consecutive down day in sugar but we are assuming yesterday's low at 18.82 in May will serve as support. May cotton has lost 3.8% in the last 5 session and closed below the 20 day moving average for the first time since February 8th. We are expecting another 2-4 cents and will then be advising clients to lift shorts. Corn was flat on the day while wheat was a small loser and soybeans giving up almost 3%. A larger crop from South America could pressure soybeans another 30-50 cents. Clients are long July soybean meal and down but we are looking for prices to rebound within that time frame, we may average in next week. Additionally they own puts in May soybean oil and should be able to book a profit next week on a move under 39.00 in May.

Trail stops down if you are short lean hogs; if the 9 day MA gives way we should see a trade under 70.00 cents in April. Mixed bag in metals; we are still anticipating a trade lower in gold, silver, and copper before we see any substantial upside. The Commodity currencies (Kiwi, Aussie, Loonie) look vulnerable; clients remain short the Loonie expecting a trade under .9500.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Oil Market Summary for 03/01/2010 to 03/05/2010

Jobs data indicating that U.S. economic recovery might be picking up steam finally pushed crude oil futures decisively over the stubborn $80 a barrel threshold. Nymex's benchmark West Texas Intermediate settled Friday at $81.50 a barrel, a seven-week high, after topping $82 in intraday trading.

An unchanged unemployment rate of 9.7% and a smaller-than-expected drop in payrolls propelled both stocks and commodities higher on Friday. Earlier in the week, industry job data also came out better than expected, pushing crude just above the $80 a barrel mark.

Any improvement in the labor market would translate into more commuter driving, more vacation driving this summer and generally greater energy demand, analysts said.

The jobs figures trumped other data, such as increases in inventories, that normally dampen oil prices. Oil inventories rose by 4 million barrels in the week, well ahead of consensus forecasts for a gain of only 1 million barrels.

Remarks by Chinese Premier Wen Jiabao at the opening of the National People's Congress on Friday expressing continued support for the economy also pushed prices higher, analysts said. Wen said the economy was on track to grow 8% this year. Recent efforts by Chinese authorities to curb bank lending have led to uncertainty about Chinese growth prospects.

But the situation in Europe with Greece's fiscal crisis weighing on the euro continued to unsettle markets. Greece successfully placed a bond issue this week, but questions remain about the stability of the euro zone. The euro inched above the $1.36 mark in late Friday trading.

Oil prices also overcame a nearly 4% drop in natural gas prices on Thursday. The benchmark Nymex contract fell 18.2 cents on Thursday to settle at $4.575 a million British thermal units. Traders concluded that cold winter weather was now over, analysts said.

The draw-down in gas storage was only 116 billion cubic feet in previous week, less than the consensus forecast, so that total gas storage remains above the five-year average. Natural gas futures settled only marginally higher on Friday at $4.595/MMBtu.

Natural gas price trends are more often decoupled from crude oil trends as increased output of shale gas in the U.S. creates a different supply and demand situation.

The Commodity Futures Trading Commission has begun flexing some enforcement muscle in energy futures trading. The CFTC fined UBS for exceeding position limits in heating oil and natural gas contracts, and the U.S. Oil Fund, an exchange-traded fund, said the agency may charge it with wrongly reporting some trades.

But the UBS fine was quite small, only $130,000, and the fault in the USO reporting may lie with the broker or clearing house. Even so, commentators said these may be early signs that the CFTC will be following through on its pledge to police futures trading more carefully.

By Darrell Delamaide for OilPrice.com who focus on, Fossil Fuels, Metals, Crude Oil Prices, Alternative Energy and Geopolitics To find out more visit their website at: www.oilprice.com

This phrase is coined for the college basketball tournament but I think it is an accurate description of what to expect as a trader this month. At its highs today oil was less than $3/barrel from making new highs on the year. Being bearish for the last 1-2 weeks has made our clients NO $ but we still feel a trade to $75/76 is imminent. We are not disputing a trade in summer is likely up to $90 but first a correction. We still favor $5 put spreads. Natural gas should finish down 3.5-4.0% lower on the week. That is not too bad! Clients have a small long position in April futures and June call spreads and at the moment are all under water. We expect the next 2 weeks to be better to us in energies; that means crude down and natural gas up. Are you kidding me that we only lost 36,000 jobs and unemployment did not change?

The equity market is being propped up by the powers that be and if the free market determined prices we would be at least 10% lower. Clients are down on their June ES puts but will stay the course being they have over 3 months time. Sugar closed up 2.4%; we suggest being long May and July via options looking for a move back to 26 cents. For the first time in 4 weeks cotton will finish lower; clients are positioned to take advantage of a set back to 75/76 cents in May. Treasuries were hit hard today and we do think more downside is likely in the coming months but we still feel one will get the opportunity to put on shorts from higher levels. If the recovery is underway which I question and there is more talk of the Fed raising rates traders should re-visit the idea of short Euro-dollars. The charts look like in the next few sessions Agriculture will trade lower. Aggressive traders could use that to get short while I would prefer getting long from lower levels.

USDA report out next Wednesday. Our current positions for clients in Ag include long corn, long soybean meal and short soybean oil. We have no positions in lean hogs with clients but it appears a double top could be forming around 74 in the April contract; that level acted as stiff resistance in mid-January as well. Live cattle finished about 1 penny higher on the week; clients remain short expecting a trade back near 89 cents in April. We caution any exposure in gold as we could see a $50 move either way. If lower we would suggest buying the dip. May silver closed at the 100 day moving average today about 15 cents off its highs. We like being long but would prefer to open fresh longs on a set back to $16.50. If we do see a retracement that holds we would think the next leg up would lift prices to near $18.50 mid-summer. Clients were advised to take profits on their Yen shorts today as prices have peeled off 3 cents in the last 2 sessions. We advised those still interested in currencies to get short the Loonie. We are looking for a move in the Loonie back under 95 cents. We are operating under the influence that stiff resistance comes in at .9750/.9800.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Crude was down just over 1% today closing almost $2 off its highs. We continue to suggest selling near $80/barrel expecting a trade near $75 in the coming weeks. We suggest on futures to have stops above $81, in options clients own May $75/70 put spreads. Natural gas was lower by almost 3% and though we are playing with fire we still like lightly buying April futures; buy 1/4 to 1/3 of the ultimate position you want to own and then add to it when the market confirms you are right. As for option traders we suggest purchasing the June $5/5.50 call spreads.

We remain unconvinced a trade higher in Indices can hold and have advised clients to sell into this strength. We suggest scaling into shorts in the S&P at 1111 and 1125. Clients own June 1050 and 1000 ES puts and are slightly under water. We advised clients to buy back the remainder of their 30 cent sugar calls today. They booked a profit on their short 30's and know hold May 25 cent calls and need a rally. The 200 day moving average held today in May at 21.92. Prices are oversold and have remained above the 200 day since April of 2009 when prices were under 15 cents/lb. Cotton was higher today but did mange to close 1.30 cents off its highs. Clients are positioned to take advantage of a break back below 75 cents this month. Bearish engulfing candles formed in the daily corn and wheat charts so a trade lower in the short term is likely.

Those that have yet to get in corn we suggest using this set back to get on board. 5 days running live cattle have closed lower; we may get a brief rally but sell it as a trade to 89.00 cents is what we are predicting in the April contract. I am confused in the metals; prices could go either way. We have clients lightly long both gold and silver but would be quick to exit on a close below $1106 in April gold and below $16.08 in May silver. For new entries we suggest trading light! The currency market is absolutely madness as 1-2% daily swings are common place in a variety of crosses. We continue to think the dollar is topping and as long as the Euro-currency can hold the recent lows we think a moderate bounce is likely; 1.38/1.39. The Pound remains the dog and should be sold on rallies but only for traders with a high tolerance for risk.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Crude oil broke through the $80 a barrel ceiling repeatedly during the week but kept falling back as hedge funds placed big bets on the Euro's decline.

The fiscal drama in Greece held global markets hostage much of the week as worries about the impact of the Greek crisis on the euro outweighed comments from Federal Reserve chairman Ben Bernanke about continued low interest rates in the U.S., pushing the euro down against the dollar and damping crude prices.

The euro recovered some ground on Friday amid new reports of European aid for Greece after falling to a nine-month low of $1.3440 on Thursday. Germany's state-owned bank KfW may take part in a planned Greek bond offering next week, according to market reports.

The Wall Street Journal reported on Friday that a small group of elite hedge fund traders have concluded that the euro could be headed to parity with the dollar and their bearish bets are increasing the downward pressure on the 16-nation currency.

The Journal compared the situation to the hedge fund attack on the dollar in 2008. However, the trades are not expected to lead to a collapse of the currency as the attacks of George Soros on the British pound did in 1992, the paper said.

Positive U.S. economic data on Friday, including a revised fourth-quarter GDP annual growth rate of 5.9%, help crude oil futures claw back some of Thursday's losses and near the $80 threshold again. Nymex's benchmark West Texas Intermediate settled at $79.66 on Friday, after topping $80 earlier in the week.

In spite of crude's difficulties in staying above $80, some analysts issued bullish prognoses for energy futures. Goldman Sachs forecast a new trading range of $85 to $95, up from the $70 to $80 of the past several months, amid supply disruptions from the North Sea and Venezuela and the impact of the Total refinery strike, which was resolved earlier this week.

Other analysts, too, looked for fundamental supply and demand considerations to reassert themselves amid the currency turmoil and lift crude oil futures into a higher trading range. Oil futures prices gained more than 9% in February but remained below January's highs.

By Darrell Delamaide of OilPrice.com who focus on, Fossil Fuels Metals, Crude Oil Prices and Geopolitics To find out more visit their website at: www.oilprice.com

These markets seem to change minute to minute...hour to hour...day to day. The 40 day moving average that we quoted yesterday was re-visited today and held in oil. Being that we did not make a new high we are still operating under the impression that prices need to move lower before we get any substantial upside. We would expect on a breach of $78 in April to see a trade down to $75/75.50. Clients are currently not long or short oil and are looking to buy on a dip. We did not move on natural gas futures today though we expect to be a buyer before the weekend. Instead this week those wanting exposure we are advising June $5/5.50 call spreads.

For the last 4 sessions stocks have been range bound between the 50 day and 100 day moving averages. We expect for prices to turn south and have positioned clients to take advantage of such a move. A close below 1090 in the S&P should signal a trade back to 1050. Sugar gained 3% today closing back above the 100 day moving average. As long as yesterdays low holds in the May contract at 23.49 we like being long. Unfortunately we did not get filled this morning buying back the 30 cent leg. Clients are still taking advantage of the upside but we would like to buy back that leg in the coming sessions.

July cotton was lower by almost 1% today; clients are positioned short expecting a trade back near 75 cents. We do not think Treasuries have moved high enough to sell but a trade closer to 118′00 in June a sale of 30-yr bonds should be on your radar. Agriculture recouped yesterday's losses; the standouts were corn gaining 2%, soy meal 1.9% and wheat 1.6%. We continue to feel being long corn via options and futures heading into the next USDA report on March12th makes sense. Live cattle were lower for the second day in a row closing 1.7% off their 2010 highs from last week. Clients are positioned in options and futures to take advantage of a trade down to 89.00 in April.

A move above the 200 day moving average was rejected today in March silver. Prices could go either way; use $16 as resistance and $15.50 as support to help you navigate these treacherous waters. A close below $1100 today in April gold means we should see at least an attempt at lower ground; support is seen at $1080 followed by $1065. We still cannot rule out a trade back to $1045; a level seen just 2 weeks ago. We are not establishing new longs at this point but are holding August $1150/1250 call spreads and are slightly under water for clients. As to not miss a move higher in the Euro-currency in case we get one which we do think is long over due, we lightly bought April 140 calls today for clients for $762.50/per. On a move to 140 in the next 1/2 weeks these should be worth $1350-1500/per. We are not comfortable with futures being if things unravel in Europe a trade to 1.33 could happen. Worse case these options can go worthless; and again clients have a very small position.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

After a $10 move higher is Crude getting tired? We want to have long exposure for clients but are on the sidelines in oil anticipating a $4/5 break in the next week or so. The 40 day moving average in April comes in just above $78 and the 200 day is seen at $75.50. We have yet to decide on if we will be trading May or June but we should have some ideas in options as well as futures. April natural gas was lower again today having lost almost 60 cents in the last 5 sessions. We finally got the trade below $5 we were looking for. We started buying options for clients today and will be looking to buy futures over the nest few sessions. Today clients were buyers of June $5/5.50 call spreads for $2050/per.

We continue to think this move in equities to be the lull before the storm; we suggest using the sideways action to get short exposure. Clients are scaling into short futures and buying puts. Sugar was not so sweet today; May lost 7% dragging prices back to the 100 day moving average. 23.90 is the 61.8% Fibonacci retracement, if that level holds we would entertain long futures and potentially buying back half of the 30 calls we sold (25/30 1:2 ratio spread).We will have more ideas to follow but one move clients made today to speculate on cotton prices backing off: sold July 90 cent calls and bought July 74 cent puts. The premium paid on the trade was $650/per. On a 4 cent correction in July futures they should be worth $1250-1500/per. Coffee gave back all the previous weeks gains losing 3.75% today. Clients are long and though they had a gtc profit order working we suggest reducing that order to 300 O/B.

Agriculture was higher today with wheat gaining 2.3%, soybeans 1.75% and corn just over 3%. This COULD be the beginning of the next leg higher as they compete for acreage. If forced to pick one grain we prefer corn thinking we have at least another 50 cents on the upside. There was little action in live cattle today but we maintain that April should find an interim top very soon; our target remains 89.00. April gold held the 50 day moving average but closed $15 off its intra-day highs. Without a close above $1128 in the next few sessions we most likely will re-visit $1100. March silver needs to stay above the 200 day moving average or profit taken will ensue; that level is $16. On both metals we would be a buyer of dips but treat this like a trade and do not fall in love. The currency market was uneventful with the exception of the Yen which advanced .60%. The dollar remains in the driver's seat; support is seen at 80.30 followed by 79.80 in March.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.