[Chaparral]

BOOM! HU-M06 punches through the 20000 line and was last seen cratering towards.....what i don't know at 19930.

I calculated 19900ish as a first Fib # and I've set my stops behind it at 20something. Maybe 18100 is next? I figured that as the 50% number.

Crude punched through the 7050 mark with just a bit of a scuffle and has how dipped as low as 6930.

This is some seriously violent chart action: the sort that just blows past stop loss orders and leaves them unfilled.

[Typhoon]

Today's price action leaves me speechless. I never imagined that any correction would be this violent. It's hard to believe that crude can continue to fall past $69, but who wants to get in the way of a falling knife? The weeks ahead should be interesting.

[Chaparral]

shat! I ratched my stop down to 19900 and got limited almost as fast as I clicked the button! Time to set buy orders at 19950-19990. Unleaded hit 19770 before bouncing so well see if there's more potential for downwards action today.

[cube]

$this->bbcode_second_pass_quote('Typhoon', 'I') never imagined that any correction would be this violent. It's hard to believe that crude can continue to fall past $69, but who wants to get in the way of a falling knife?

[CARVER]

$this->bbcode_second_pass_quote('MrBill', 'T')o be honest, I think that is a load of crap. Most countries are simply a mess because of corruption with or without any outside help. Clans, tribes, family politics, call it what you want. You never saw someone screw a Native Indian like another Native Indian over tribal politics and dividing the spoils of office. They do not need any outside help, they are pretty good at it themselves. Ditto for most politicians. Even where there are no differences to exploit, we seem to invent them. Take Republicans and Democrats for want of a better example. Basically both parties are tax & spend and while the voters get worked up about the differences between them, the politicians themselves are busy helping themselves to the pork. And politics in Canada or Japan or anywhere else does not get any better, just worse in some places like Italy for example. So take most poor countries and you will just find a lot of corruption with or without foreign companies. Guess I will just link this article on the Salomon Islands as an example. Too tired to fight much about this issue. So take it for what it is worth.

Just a bunch of locals fighting for control over the spoils even if that means less for everyone. Even if a foreign company comes in and improves the situation for a while, it just leaves more for them to fight over later. You cannot win. If you do nothing, you're ignoring the plight of the poor. If you try to help them, you're exploiting them.

Nothing to do with protecting the rights of the wealthy or the elite. Which in my mind is some sort of empty strawman argument. On one hand we are supposed to respect other countries sovereignty even if they engage in genocide and ethnic cleansing. On the otherhand, if we do business with their elected leaders (rightly, wrongly, with or without corruption and vote rigging) we are somehow propping up puppet regimes?

[MrBill]

I had a blasted important meeting yesterday afternoon in Nicosia to bring some big fund distributors on board for the launch of my commodity & energy fund, so as a result I refrained from taking a large short position despite my models turning increasingly bearish with an unambiguous sell signal. Heart breaking to see us plumbing $70 from my initial sell-off points of $7460-7475-7500 ($7499 was the high). I just cannot afford to miss moves of that magnitude (track record)! Oops.

So in any case, short covering aside ahead of the weekend, this correction still has a way to go. The hourly and daily charts are both in full short positions and the weekly charts have taken out last week's lows as well as the previous week's, so although above its moving averages, it looks like it would test lower first before finding any technical support.

I calculate my .382R fibs on the continuation charts as being $68.50 on the daily chart from $58 to $75 (Brent) and $67 on the weekly chart from $54 to $75. If you look at WTI you may get slightly different levels, but they have tracked one another relatively close lately, and in any case the direction is clear, so no use picking bottoms so far ahead of time.

My floor broker on the NYMEX was hearing of some fund liquidation yesterday at the close. Of course, expect to see some natural buying interest (even if to close shorts) at or near $70 as it is a nice round number. But without fresh inputs (read bad geopolical news) I think this rally was getting overdone and in need of some house cleaning.

Would look to sell into a re-test of $7150 now (yesterday's support is today's resistance), but realistically we may not see it higher than $7085/7130 on any bounce unless a headline comes out of left field and surprises us. We came a long way in a very short time on the back of Iran and other bad news, so we can claw back some of those gains quite easily as well. Good luck.

$this->bbcode_second_pass_quote('', 'H')OUSTON (MarketWatch) -- Brazil's state-owned oil company said Wednesday it was suspending new investments in Bolivia and blocking funds to expand a gas pipeline between the two neighbors following Bolivia's recent move to nationalize its oil and gas fields

[MrBill]

Tested lower here this morning to $7014 in the Brent ($6971 in the WTI) before up on short covering. No comments or news that I am aware of? Was enough to flip the short-term hourly charts from short to long. Took profit on my short, sold again on the bounce, stopped out and went long, but square now. We'll see if it is legitimate buying to go long or what here this afternoon? Just maybe profit from a little short covering ahead of the weekend? Must be a holiday in parts of the Spanish speaking world, so volumes might be light?

Here are some metals comments from DRKW
$this->bbcode_second_pass_quote('', ' ') Market comment
Gold: It seems that a day’s pause was enough to reinvigorate the gold market after the retreat to 660 on Wednesday. Thursday opened a little more quietly with Japanese holidays continuing, and the price ranged between 660 and 667. Again the afternoon’s trading was livelier as speculative money came into the market aided by expectations of de-hedging to continue, particularly
from Barrick, and by ongoing Iran tensions. A high of 677.40 was reached before further selling was found and gold eased back to close 674.60 amid gains across most commodities again. EUR has held near its recent peaks with ECB rate hikes expected in June and attention moves now to NFP to see whether any stronger numbers here can take the shine off EUR and gold and focus attention back on USD.

Silver: Another choppy day as silver started at 13.65, dipped to 13.55, rallied to 14.25 yo-yo’d to 13.70 before rebounding to close at 13.83. Demand and trading volume for the ETF remains positive, and at approximately 10mmoz per day according to BGI, the volumes are 7.50% of those seen on Comex on average this year. 14.70 highs from April and 15.00 remain upside targets, with ranges quite likely to extend on the downside to 13.20 and 12.20 as volatility persists.

Platinum: Trading continues to be more subdued in platinum with Asian markets closed in the second half of this week. Narrow ranges between 1,165 and 1,180 have failed to give further direction despite dramatic rallies in copper and recovery after Wednesday in gold and silver. The market seems undecided at these levels, closing mid range around 1,175 for the past 3 sessions. Near term direction may be given by the performance of other commodities and the risks of liquidation.

Palladium: Similarly to platinum, palladium has traded quietly, following sister metal and taking some cues from the rest of the complex. Prices have not strayed far from 375, ranging between 370 and 380, and a failure to move higher may weigh on the metal in the near term given persistent speculative length.

[rwwff]

Question for zee traders.... Should a long term gold accumulator continue purchasing at $650+ or do the Anti-Frenzy Alarm bells kick in and say, 'at this point in time, this is silly.'

[carbuster]

$this->bbcode_second_pass_quote('rwwff', 'Q')uestion for zee traders.... Should a long term gold accumulator continue purchasing at $650+ or do the Anti-Frenzy Alarm bells kick in and say, 'at this point in time, this is silly.'

[Mechler]

CNNMoney attributed yesterday's dip in oil prices to a mystery letter from the Iranian President to the US President. The letter was supposed to offer new ideas on easing tensions between the countries. Well, here's the latest on that letter:

Iran letter blasts Bush, democracy

NEW YORK (AP) -- Iran's president declared in a letter to President Bush that democracy had failed worldwide and lamented "an ever-increasing global hatred" of the U.S. government.

http://www.cnn.com/2006/WORLD/meast/05/ ... index.html

I assume that the traders will take notice of this. A bullish sign for today's commodity markets?

[MrBill]

$this->bbcode_second_pass_quote('carbuster', '')$this->bbcode_second_pass_quote('rwwff', 'Q')uestion for zee traders.... Should a long term gold accumulator continue purchasing at $650+ or do the Anti-Frenzy Alarm bells kick in and say, 'at this point in time, this is silly.'

[MrBill]

Here's the line-up for 2006. Forecasters see an active Atlantic Hurricane season.
$this->bbcode_second_pass_quote('', 'N')ame that hurricane
Any tropical storm with sustained winds of 39 miles per hour gets a name, a tradition put in place by the National Hurricane Center in 1953. A storm becomes a hurricane when its winds hit 74 mph. Initially, only women’s names were used. Men’s names joined the roster in 1979. The task of assembling a list of names now rests with the World Meteorological Organization. Here’s their line-up for the 2006 Atlantic, Caribbean Hurricane season:

• Alberto
• Beryl
• Chris
• Debby
• Ernesto
• Florence
• Gordon • Helene
• Isaac
• Joyce
• Kirk
• Leslie
• Michael
• Nadine • Oscar
• Patty
• Rafael
• Sandy
• Tony
• Valerie
• William

[MrBill]

Because I had the last two days off to celebrate Russia's Victory Day I almost forgot today was Wednesday. Here are the Reuters forecasts for today's inventory numbers:

Crude f/c -0.6 mio bbls to 346.7 mio bbls
Distillates f/c -0.3 mio bbls to 114.5 mio bbls
Gasoline f/c +1.2 mio bbls to 202.7 mio bbls
Refinery Runs f/c +0.9% to 88.8%

and tomorrow's numbers:

Nat Gas f/c +50 to +110 bcf



The EIA monthly oil supply & demand reports showed

World Oil Demand in May 85.3 mbpd vs. 83.7 in 2005
US Oil Demand in May 20.79 mbpd vs. 20.66 in 2005
US Gasoline Demand in Q2'06 9.26 mbpd vs. 9.26 in 2005
US Distillate Demand in Q2'06 4.09 mbpd vs. 4.06 in 2005
US Crude Inventory at end of Q2'06 332 mio bbls vs. 329 in 2005
and at end of Q3'06 305 mio bbls vs. 307 in 2005

So that world oil demand number gives room for a pause given the risk of supply shocks on the back of ongoing production outages in Nigeria (real) and the threat of supply interuptions from Iran (still hypothetical at this point), although the situation in the USA does not look critical at this point unless those forecasted hurricanes take out some choice oil & gas assets and do some more underwater damage to offloading facilities again this summer/fall. Still, we are heading into the summer driving season starting with very high numbers, so the market is pricing in eventual disruptions from one quarter or another.

In any case, rumors on the NYMEX that Bush government may look to suspend quality improvements to unleaded gasoline which may include relaxing MTBE fuel additive bans in favor of ethanol blends and/or dropping import duties on ethanol. This would likely narrow the price gap between HU and the RBOB contracts in the future months up to the end of the summer driving season.

[MrBill]

Larger than expected builds in the crude and the unleaded have put the crude under pressure. Basically, no bullish news in the inventory numbers, so hard to sustain any upwards price action given that the daily and weekly charts are heavy in any case. Look for a re-test to sub-$70 in the Brent and sub$69 in the WTI here now.


Quite remarkable developments in Russia as you can read by these comments by Putin and Kudrin. Would see it as mainly rouble friendly, but the rouble was already under pressure to revalue, so this is just another match on the fire.

$this->bbcode_second_pass_quote('', 'M')OSCOW, May 10 (Reuters) - Russian President Vladimir Putin set out an assertive economic agenda on Wednesday, calling for the rouble to be made convertible ahead of time and backing gas monopoly Gazprom's <GAZP.MM> international ambitions.
But, in his seventh annual keynote address, Putin served notice that Russia would only join the World Trade Organisation -- an event which would seal the country's transformation from communism to capitalism -- on its own terms.
The world's No.2 oil exporter has hoarded much of the windfall from record oil prices, enabling Putin to instruct his government to make the rouble fully convertible six months ahead of schedule.
"Today, I propose speeding up the abolition of remaining restrictions and completing this work before July 1 of this year," Putin told Russia's establishment in a one-hour speech delivered in the Kremlin.
If that schedule holds, Russia will have bounced back from devaluation and default in just eight years, and in time to host its first Group of Eight summit in St Petersburg in mid-July.
The rouble <RUBUTSTN=MCX> rose after Putin's speech to new six-year highs just shy of 27 to the U.S. dollar, although traders said much of that reflected the greenback's weakness against the euro.

NO TIME LIKE THE PRESENT
Removal of capital controls would make rouble-denominated Russian debt more attractive to foreign investors by removing a requirement to lodge an interest-free reserve payment at the central bank.
It would also make Russia prey to speculative capital flows, although with Moscow running huge budget and current account surpluses now may be as good a time as any, analysts said.
"Given the strength of the current account surplus and evidence of net capital inflows, this is obviously positive for the rouble," said Tim Ash, emerging markets economist at Bear Stearns in London.
Finance Minister Alexei Kudrin said the government would be able to meet the deadline, and promoted the rouble as a reserve currency for Russia's trading partners.
"I expect that some countries, with whom we have trade relations, will convert part of their forex reserves -- probably a small one at the first stage -- into roubles," Kudrin told reporters after Putin's speech.
"This will be an absolutely reliable investment."

DEEDS, NOT WORDS
Putin's speech made no direct mention of the G8 summit, nor of Russia's increasingly fraught relations with Washington after U.S. Vice President Dick Cheney accused Moscow of "blackmail" against energy consuming countries.
But he threw his weight behind the push by gas exporter Gazprom -- now the world's third-largest company by market capitalisation -- to acquire gas distribution assets in Europe and seek alternative markets.
"We cannot stop at this," Putin said. "We need to ... move into new markets ... and to fulfil our obligations to our traditional partners."
In another indirect swipe at Washington, Putin said Russia would join the World Trade Organisation "only on the conditions that take into account (its) economic interests".
Russia has been negotiating to join the WTO for over 10 years and is the largest economy outside the 149-member grouping.
It must strike bilateral agreements with existing members before striking a comprehensive final entry deal and talks with the United States have stalled.
Putin did answer U.S. concerns about rampant video, music and software piracy -- but was silent on Washington's demand for foreign banks to be allowed to open branches in Russia rather than subsidiaries. Russia fears that its weak banking system could be wiped out by foreign rivals if it yields on that point.

[Chaparral]

Bearish news for pump gas, yet from this morning's low of 20160 it has now rocketed up to 21450 as gold,silver and crude just putter around. It's been a morning of getting stopped out. In the absence of any international surprises, I guess the funds are just piling on to play their usual game of musical chairs??

[MrBill]

$this->bbcode_second_pass_quote('Chaparral', 'B')earish news for pump gas, yet from this morning's low of 20160 it has now rocketed up to 21450 as gold,silver and crude just putter around. It's been a morning of getting stopped out. In the absence of any international surprises, I guess the funds are just piling on to play their usual game of musical chairs??

[Typhoon]

The strong rally in HU today has been due to gasoline demand. The four-week average is below year-ago levels, but demand for this week alone was convincingly higher. This outweighed the inventory build, which was largely expected.

[Chaparral]

Interesting chart action. HUM6 rallied to 20900 and puttered around there and then jumped to 21400 and dithered a little before finally shooting up to reach 21700 whereabouts. It kind of looks like about three "tsunamis" piled on top of each other as the big longs came out to play.

I guess this weekly demand spike along with the ethanol prices and those two refinery glitches were enough to bring them out. Ok now hurry up and take profits already

[MrBill]

Yesterday was no less than buy the rumor, sell the fact, then buy the next rumor. Fear & greed. Ouch! And higher we went after that brief initial dip following the inventory data. To be honest, I missed it. No hits, no runs, no errors, but no signing bonuses either! ; - )

Found this interesting. I think you can draw the lines between emerging markets and commodites yourself?
$this->bbcode_second_pass_quote('', 'G')lobal Equity Strategy
What keeps me awake at night?
For the record nothing keeps me awake at night. But when it comes to our overweight position in emerging markets I do get a little worried. US mutual fund investors have never been keener on emerging markets, and this scares the willies out of me. However, for the time being we are prepared to 'ride our winners' as I preach in my behavioural meetings. But the focus must be on cheap EMs.

► Emerging market equities have enjoyed a significant outperformance of the developed markets in recent years. Since 2003 the MSCI developed market index is up an impressive 87%. However, set beside the MSCI emerging markets universe performance of 225%, this look paltry.

► In my work on behavioural finance and contrarian strategies I regularly argue that one should invest in the things that make you feel absolutely dreadful. Matt Lieberman's work has shown that physical pain and social pain are felt by the same part of the brain, so doing the opposite of everyone else tends to feel like having your arm broken on a regular basis.

► So what is it that bothers me so much about our position in emerging markets? For starters they are trading not far off parity with the developed markets on measures like price to book. Using a broader variety of valuation measures, since 1995 emerging markets have traded at a 30% discount relative to the developed markets. Today they stand at less than half their usual discount.

► The really bad news is that US mutual fund investors don't seem to be able to get enough of emerging markets (EM). The inflow recently reached a 7 standard deviation event! Some three times greater than the inflow bubble in 1993. Joe Six-pack is a superb contrarian indicator. He ends up chasing performance and hence buying high and selling low. For instance, when Joe is buying massive amounts of EM, the returns over the following three years are on average 1.7% p.a., whereas when he is selling EMs, the returns over the subsequent three years are 15% p.a.

► The good news is that our cheap basket of emerging markets has relatively low beta with the developed markets (-0.2), whilst EMs as an asset class continue to have a very high beta (2). So our basket may be more independent of developments in the major markets than aggregate emerging markets have tended to be.

[MrBill]

It's a brave new world. My goal is to have one electronic platform with access to all the various exchange traded products. Now OTC FX trading. Oh my, gosh. Too good to be true. Let's see how it ends, but the CME is picking up bits & bobs and turning itself into quite the central clearer. That with the ICE now offering NYMEX shadow contracts, and the CME offering NYMEX contracts, should mean lower transaction costs and lower margins due to cross margining instead of having capital tied-up at various exchanges. It is also very democratic. The average investor now has access to the same proprietary technology and information as the most capital intensive investment bank barely a decade ago, and at a fraction of the cost.

$this->bbcode_second_pass_quote('', ' ') CME and Reuters to Create FXMarketSpace – The World's First
Centrally-Cleared, Global FX Marketplace

CME is proud to announce that it has partnered with Reuters to create FXMarketSpace, the world’s first global FX marketplace to offer anonymous, cleared trading of OTC FX instruments through a central counterparty.

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Broad Access, Credit Efficiencies
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Broad global distribution through Reuters market leading desktop community in FX,
CME clearing firms and selected independent software vendors;
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We believe these advantages will ultimately provide customers with deep liquidity, credit-efficient trading, reduced costs and open, transparent access to the marketplace. Ultimately, FXMarketSpace will help global FX markets to operate more efficiently and grow even faster.

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CME and Reuters have long-standing reputations for meeting and exceeding the ever-changing needs of the FX market. FXMarketSpace is the latest way in which these two leading organizations in the FX futures and spot markets – and in global financial services – can deliver value to our customers.