[greenworm]

Mr. Bill,

Concerning some of your choices in the metals area here are some thoughts.

BHP-check out their numbers, they are a goliath, problem is the market doesn't always reflect the numbers as you know. Cramer pumped it and a lot new faces started showing up. UNDERVALUED in a big way much like (aauk). Should reach par, will it? I do not have a crystal ball.

Newmont as well Barricks are the stocks of choice for the peak oiler groups, I think some book concerning $100 oil mentioned them. Looking tired of late and this is not taking into account the recent drop.

Phelps Dodge- this thing moves like it has an extremely low float, but it doesn't. This one is a good one to daytrade off and on. This one has legs!

I haven't researched the others.

[MrBill]

$this->bbcode_second_pass_quote('greenworm', 'M')r. Bill,

Concerning some of your choices in the metals area here are some thoughts.

BHP-check out their numbers, they are a goliath, problem is the market doesn't always reflect the numbers as you know. Cramer pumped it and a lot new faces started showing up. UNDERVALUED in a big way much like (aauk). Should reach par, will it? I do not have a crystal ball.

Newmont as well Barricks are the stocks of choice for the peak oiler groups, I think some book concerning $100 oil mentioned them. Looking tired of late and this is not taking into account the recent drop.

Phelps Dodge- this thing moves like it has an extremely low float, but it doesn't. This one is a good one to daytrade off and on. This one has legs!

I haven't researched the others.

[MrBill]

With some OPEC members not in attendance, $5 million works out to about $500K per member for a short meeting where production is not expected to be cut, so there is little of substance to discuss.

Long live Chavez, long live the Bolivar Revolution, and long live $70 per barrel oil to pay for it all!

$this->bbcode_second_pass_quote('', ' ')Members of the committee planning the meeting of the Organisation of the Petroleum Exporting Countries, the oil producers group, even discussed embroidering bedsheets with each minister’s name.

The price tag for the lavish Caracas meeting is 20 times higher than that of the more regular Vienna-held Opec meeting and tops the $3m (£1.6m) Kuwait spent on its meeting in December.

Venezuela, whose per capita income is $6,467 a year, is spending $5m on hosting Thursday’s Opec meeting.

Hugo Chávez, Venezuela’s populist president, is planning to give a speech at Angel Falls, the country’s spectacular jungle waterfall, and the world’s largest. Boat rides and a possible trip to a Caribbean holiday island are also on offer for ministers who feel up to it. Mr Chávez has left little to chance in this show of largesse.

A 53-page manual explains Opec and “the culture of Arab, Muslim countries”. It also includes a poem in praise of Mr Chávez: “His country is about oil, but his heart is still flesh and blood, not money.”

[MrBill]

Well, the market is slowly coming to life this morning after a long weekend. I hope you all drove lots? Who knows if you'll be able to afford it come Labor Day? ; - )

The crude looks a little weak out of the box. $7060 off the high os $7098 in the Brent, $71.20 in the WTI vs. a high of $71.77. Nice to see that spread has come back into line. My universe was tilted so long as Brent was at a premium and I could not catch my balance. Must be something to do with the inner ear?

I see there are some stories on Reuters about Resource Nationalism. If anything new, I will post them. Seems to the theme at the moment. Not that Ayn Rand would be surprised?

Would love to be a part of this deal.
$this->bbcode_second_pass_quote('', ' ')The chief executive of oil and gas pipeline operator Kinder Morgan, Inc. said on Monday that senior management and investors, including a unit of Goldman Sachs, have proposed buying the company for $100 a share and taking it private.

The proposal values Houston, Texas-based Kinder Morgan, which operates 43,000 miles of pipelines, at about $13.4 billion, and highlights continued investor interest in energy-related assets.

Richard Kinder, chairman and CEO of Kinder Morgan, said in a statement the total value of the deal, including debt, would be about $22 billion. That makes the proposal one of the biggest ever private equity deals.

[Chaparral]

Missed the opportunity to dump my gold and silver longs and short Chicago and Kansas wheat and crude. Such is the price of having a life off the trading platform.

Does anyone else besides me see a sort of downward trending channel in HU? I take pure chart reading with a grain of salt but the fundamentals provide no clear direction at this time. Somebody pulled the rug out from under the longs today near the close. I'm still short and I'm still looking at a 19700-19800 exit or therebouts: in the absense of any surprises, it seems to me that HU is headed there.

The appearances on the street in Southern Cal is that Memorial Day traffic was a bit light; i.e. people were staying local rather than driving hundreds of miles/kilometers to wherever.

[MrBill]

$this->bbcode_second_pass_quote('Chaparral', 'M')issed the opportunity to dump my gold and silver longs and short Chicago and Kansas wheat and crude. Such is the price of having a life off the trading platform.

Does anyone else besides me see a sort of downward trending channel in HU? I take pure chart reading with a grain of salt but the fundamentals provide no clear direction at this time. Somebody pulled the rug out from under the longs today near the close. I'm still short and I'm still looking at a 19700-19800 exit or therebouts: in the absense of any surprises, it seems to me that HU is headed there.

The appearances on the street in Southern Cal is that Memorial Day traffic was a bit light; i.e. people were staying local rather than driving hundreds of miles/kilometers to wherever.

[MrBill]

Estimates of today's DOE inventory no.s are

Crude f/c -0.9 mio bbls to 343 mio bbls vs. 3 yr ave 308 mio bbls
Distillates f/c +1.0 mio bbls to 118 vs. 3 yr ave 106 mio bbls
Gasoline f/c +3.5 mio bbls to 212 vs. 3 yr ave 209 mio bbls
Refinery Runs f/c +1.0% to 90.7% vs. 96.2% YOY

Market giving up ground ahead of NY's opening. Currently testing support at $70.25 in the WTI and a low of $6925 in the Brent. Just a steady erosion like a mudslide on no particular news.

[MrBill]

DOE numbers released were bullish for the crude and products, especially gasoline, where the +1.0 mio bbls was not only substantially below the +3.5 mio bbls estimate, but API actually showed a decline of -1.1 mio bbls amoung its members?

Gasoline stocks are now 209.3 mio bbls which is exactly the three year average even as demand has grown which is not good given we know the changeover to ethanol is not going great and we can expect weather problems later in the driving season.

Crude +1.6 mio vs. -0.9 mio f/c
Distillates +1.8 mio vs. +1.0 mio f/c
Gasoline +1.0 mio vs. +3.5 mio f/c
Refinery Runs +1.7% vs. +1.0% f/c

Product demand +4.8% YOY
Distillate demand +1.0%
Gasoline demand +0.9%
Imports +1.29 mio to 10.84 mbpd
Product imports +86K to 4.28 mbpd

Comments by Jim Ritterbusch
$this->bbcode_second_pass_quote('', 'A')FTERNOON FUNDAMENTAL COMMENTARY Thursday, June 01, 2006
Crude/Products: Today’s price strength was concentrated in the gasoline as the smaller than expected gasoline stock build ignited a frenzy of buying into the unleaded pit as the release of the numbers roughly coincided with reports of a refinery snag at a Valero Corpus Christi, Tx. facility. While the headlines also alluded to a revival in gasoline demand, we viewed last week’s 237,000 b/d hike in implied demand as due to heavier than normal inventory building by the distributors ahead of the holiday. With this in mind, this increase could easily be negated in next week’s report. The rest of the data appeared bearish with gasoline production increasing again and with imports at 3rd highest level ever. The larger than expected jump in the runs of 1.7% of capacity also carried bearish implications for the products and suggested that last week’s concerns over refinery issues were not fully justified. Nonetheless, lack of significant chart resistance until the $219.50 area basis July unleaded facilitated today’s bullish response and could delay a significant correction until some bearish news is forthcoming. The pop in the nearby gas cracks to highs above the $20.00/bbl level further enhances the crack charts but the continued strength in the runs could provide an obstacle to additional expansion. Meanwhile, the crude data looked decidedly bearish given the ability of crude stocks to build in the face of the sharp increase in the runs. Crude imports continue to surprise to the high side with last week’s 10.8 mb/d representing highest weekly pace since last August. However, Cushing stocks drew another 0.6 mb and are off 10% during past 3 weeks. Overall, although the gasoline build maintained stocks within about 1 mb of 3 and 5 year averages, the market appears to be demanding a significant supply surplus in order to desensitize the market to occasional and inevitable refinery problems. Although weak metal markets provided a drag on values, comments out of the White House regarding Iran’s nuke program appeared to spur some modest broad based support. The OPEC meeting didn’t appear to have a significant impact as a no change in production quotas appear inevitable. Although our near term bias in the crude oil remains bearish in anticipation of an eventual drop in nearby values to the $67.50 area, we would reiterate that such a decline will require renewed some downside lead from the gasoline market. All in all, two sided price volatility is likely to remain high pitched through most of June but with a downward bias remaining intact.

-Jim Ritterbusch
Consulting Analyst

Global Derivatives Research

[MrBill]

Some comments on the metals, which I will admit I have been neglecting as of late despite their obviously influence on the crude as well as mirroring moves in the strength of the dollar or perceived weakness as the case may be?
$this->bbcode_second_pass_quote('', 'D')resdner Kleinwort Wasserstein, Theodor-Heuss-Allee 44-46, 60486 Frankfurt am Main. A Member of the Dresdner Bank Group.
Market comment

Gold: Falling through support at 635-40 yesterday, gold put in a low of 621.50 before recovering to close 628.70. The resurgence in the USD after proposals for talks with Iran and the release of more positive FOMC minutes for US rate prospects set the scene for the morning. Trending steadily downwards throughout the day with profit taking in evidence from the morning, the move gained pace in NYC after a brief attempted rally with further speculative selling. Bargain hunting appeared from the lows to support the $10 recovery, but trading this morning has been quiet ahead of NFP this afternoon, and remains at risk of further corrective consolidation if the numbers are strong.

Silver: Mirroring gold, silver also fell throughout the day, losing 20c in Asia and a further 55c in Europe/NYC (to reach 11.70), before regaining ground on gold’s turn and physical buying interest. Finally closing at 11.92, silver is expected to remain volatile while above 11.50-60, with resistance between 12.50 and 12.60.

Platinum: Having held relatively firm last week, platinum finally succumbed to the pull lower from gold and silver. Having fallen through support at 1,260 on Wednesday, platinum headed lower again in yesterday’s trading with profit taking again driving the market. With selling pressure from early in the day platinum reached 1,244 in the morning fix and 1,225 in the afternoon fix with a low of 1,220. The outlook may be less bearish as consumers stop in to buy on the dips and the fundamental outlook on environmental legislation remains positive.

Palladium: Sister industrial metal palladium also suffered yesterday with silver, platinum and base metals selling off. Revisiting the 330 level after opening almost $10 higher, palladium has bounced off this level this morning. A break of support here would open up 320-325 area and the risk of a deeper consolidation. However, with palladium having followed recently the rest of the complex a turn in fortunes on a softer NFP could see a brighter outlook.

[Silverharp]

does anyone listen to FSN at www.financialsense.com , interesting discussion about behind the scenes talks between the US an Iran. Jim Puplava made the point that there is a $10 premium because of such geo factors and another $10 because of speculation. given that there should be a more benign Hurricane season this year, would anyone see Winter 06/07 futures as being a great long opportunity if all this good news comes to pass?

[Chuck]

$this->bbcode_second_pass_quote('Silverharp', 'd')oes anyone listen to FSN at www.financialsense.com

[MrBill]

Good morning. Will keep it short as have a meeting with the MAN in about 15 minutes here. Obviously, a stronger close on Friday than I banked on? Pretty much a gainer from the get go and the strong close technically opens the heavens for a continued move higher, although must clear some previous highs in the $73 area, and most importantly have some follow through. The candle charts look like a piano key board. Ebony & ivory trading together in perfect harmony. One day up, one day down, chop-chop, adinfonitum! ; - )
$this->bbcode_second_pass_quote('', 'O')il and precious-metals prices have lost momentum recently, but that isn't stopping exchange-traded fund providers from pressing forward with more commodity-related products.
"There's plenty of room for more commodities," said Cliff Weber, senior vice president of the ETF marketplace at the American Stock Exchange.

Among ETFs in registration is a fund from Barclays Global Investors, the largest ETF sponsor, designed to track the Goldman Sachs Commodity Index. Other providers have oil-linked ETFs in registration.

Meanwhile, Deutsche Bank AG is looking to follow its Deutsche Bank Commodity Index Tracking with new commodity-linked products. Those ETFs are still on the drawing board and not yet filed with regulators, said Kevin Rich, chief executive of DB Commodity Services LLC.

[MrBill]

Diversify, diversify, diversify, but how?
$this->bbcode_second_pass_quote('', 'A')ccording to recent research, an array of investments whose prices used to rise and fall independently, are now increasingly correlated. A recent report from Merrill Lynch & Co. found that as of February this year, small stocks were 94% correlated to the broad Standard & Poor's 500-stock Index -- which means, in simplified terms, in a year when the S&P 500 rose, an index of small stocks also rose 94% of the time. By contrast, as recently as six years ago, the figure was just 62%.

For a more dramatic example, look no further than the roller coaster in emerging-markets stocks of recent weeks. The MSCI EAFE index, which measures emerging markets, now shows 96% correlation to the S&P, up from just 32% six years ago.

Even commodities like oil and precious metals are increasingly moving in tandem with stocks. The Goldman Sachs Commodity Index, which tracks 24 commodities, moved from a correlation of negative 14% in 2000 -- in other words, it tended to fall when stocks rose, and vice versa -- to a positive correlation of 33% at present, according to the report, released in late March

[MrBill]

Think any pause by the FED to guard against lower, slower job growth at the expense of Core Inflation, much less Headline Inflation, might re-ignite a flight into inflation hedging assets like the shiny stuff and cause further dollar weakness, maybe taking out the psychological $1.3000 against the euro and 110.00 yen to the dollar once and for all? A test of mettle for Bernanke. Strong dollar or pandering to the home owning masses?
$this->bbcode_second_pass_quote('', ' ')Economics

Argentina - Positive: Rebound in tax revenues in May
Brazil - Positive: Further increase in vehicle sales
Brazil - Watch: Comfortably in the lead
Critical Events Calendar - Key events for investors
European Economics for Investors - Consumption, inflation expectations and the ECB
Global Economics - DrKW Global Surprise Indicator rises on Eurozone strength
Hungary - Neutral: No major surprises with new cabinet
Malaysia - Negative: Export growth weakened further in April
Mexico - Positive: Declining inflation expectations
Peru - Positive: Sharp dip in May CPI
The Week Ahead - Minimising uncertainty
Turkey - Negative: CPI targets slipping out of reach
US data snapshot - May payrolls rise less-than-expected, Fed pause back on the agenda
US Economics for Investors - Soft job growth may lead Fed to pause despite rise in core inflation
US market closing comment - Fed rate pause in June is back on the table after weaker payroll report

[MrBill]

$this->bbcode_second_pass_quote('', '1')2:46 05Jun2006 RTRS-SWITCHING IRAN OIL SALES TO EUROS FROM DOLLARS IS NOT POSSIBLE -OILMIN TELLS NEWS AGENCIES
12:47 05Jun2006 RTRS-IRAN PRICES OIL IN DOLLARS BUT CAN BE PAID IN OTHER CURRENCIES -OILMIN TELLS NEWS AGENCIES
12:53 05Jun2006 RTRS-Iran says cannot switch crude sales into euros
TEHRAN, June 5 (Reuters) - Iran will continue to price its oil sales in dollars but can receive payment in other foreign exchange needed by the central bank, Iranian Oil Minister Kazem Vaziri-Hameneh said on Monday.
"Although pricing is in dollars, our receipts can be in any foreign exchange," he was quoted as saying by the ISNA students news agency.
When asked about discussions over pricing oil in euros, held on the sidelines of an OPEC meeting in Venezuela, Vaziri-Hamaneh said: "Currently, because basic pricing is in dollars, it is not possible to make such a change."

[MrBill]

Technically, the daily did see substantial follow through buying ($73.85 WTI), so the break higher looks clear despite thin volumes. Will see what NYMEX is inclined to do, but most of the metals and commodities are up strongly at this time.

Metals comments by DRKW
$this->bbcode_second_pass_quote('', 'M')arket comment
Gold: Although starting under pressure in Asian trading on Friday, precious metals recorded gains across the board, with gold bouncing off the 620 lows to recover 635 and close off the highs of 638.25. Aided by weaker US data, short covering and renewed buying drove the increase in the price which reversed Thursday’s falls. Our FX technical team expects that EUR could today target 1.2971 or even towards 1.3123, particularly without the support
hoped from late last week as NFP came in weaker than expected and with prior months revised lower. Gold may then continue the progression off the lows, but will face resistance at 650-55, and needs to clear this level and 670 in order to give more positive signals for a renewed rally. Some volatility and a degree of corrective trading may yet persist ahead of this with a partial European holiday starting this week.

Silver: Also under pressure in Asia, silver followed gold down to reach lows of 11.82, but also found bargain hunting giving support on the dips. As gold turned higher, silver also reversed the early trend and regained 12.00 and 12.25 before profit taking capped the move and silver closed at 12.10. The metal faces further resistance on the upside in order to break out of the current consolidative trading, and support below at 11.60-65 will be important.

Platinum: Despite signs of consumer interest on the way down, platinum continued to dip in early trading, reaching a low of 1,215. However, a more positive outlook developing in gold and silver buoyed the metal and the buying interest helped to prevent the industrial precious metal from falling further. A $25 move higher ensued as the complex rallied in later trading, but like silver, platinum faces resistance above still at 1,260 and 1,275 underneath the recent all time highs (1,336).

Palladium: The fourth of the four precious metals followed the complex higher, putting in the best close on close gain of the four. Previously sold down to 330, palladium saw 350 again on Friday and seems set to continue to take its cues from the rest of the complex.

[Chuck]

Global drought could spell big profits for corn

Exited my long dec-corn last friday @ 285.4
Price now @ 278.0
Definitely not my kind of market, with big gaps up or down. Brrrr.
Was trading the stuff because of liquidity problems on my second account. The account was almost wiped out, but now I'm creeping back.
Isn't fun to trade with your back against the wall, but if you can't stand the heat .......

[Chaparral]

$this->bbcode_second_pass_quote('Chuck', '[')b]Global drought could spell big profits for corn

Exited my long dec-corn last friday @ 285.4
Price now @ 278.0
Definitely not my kind of market, with big gaps up or down. Brrrr.
Was trading the stuff because of liquidity problems on my second account. The account was almost wiped out, but now I'm creeping back.
Isn't fun to trade with your back against the wall, but if you can't stand the heat .......

[MrBill]

UPDATE: Iran's Larijani says some atomic proposals positive. But crude prices at or near daily highs, so not having a noticeable impact on prices.

Perhaps another headline is more telling, Exxon books cargo to export Japan gasoline to the US. . I do not know if this is just a commercial window of opportunity or not, but seems strange to me that one importing country is exporting imported ME oil to another importing country in what looks like a expensive shipping play? I have often seen inter-Asian re-exports, and European gasoline headed for the US, as Europe uses more diesel than gasoline, but the first time since Katerina/Rita that I have seen this? Also, after Katerina, the Japanese did not actually ship gasoline to the US, they just imported less, freeing up capacity for emergency supplies to reach the US in the aftermath of Katerina/Rita. Dunno, will need to keep digging?

Ben is making the right noises to keep inflationary concerns at bay, but at the forefront of the dialogue.
$this->bbcode_second_pass_quote('', '"')It is reasonably clear that the U.S. economy is entering a period of transition," Bernanke told a group of bankers. "The anticipated moderation of economic growth seems now to be under way."

While welcoming signs of cooler growth, the U.S. central bank chief stressed concerns over core inflation, saying it had reached levels that "if sustained" would put it at or above the upper end of the range consistent with price stability.


"These are unwelcome developments," Bernanke said of the quickening pace of non-food, non-energy inflation.

"The (Fed's policy-setting) committee will be vigilant to ensure that the recent pattern of elevated monthly core inflation readings is not sustained," he said.

"Toward this end, and taking full account of the lags with which monetary policy affects the economy, the committee will seek a trajectory for the economy that aligns economic activity with underlying productive capacity," Bernanke added.

Financial markets saw the comments as suggesting the Fed was likely to raise benchmark overnight interest rates for a 17th consecutive time at its upcoming meeting on June 28-29.

[MrBill]

Metals comments compliments of DRKW
$this->bbcode_second_pass_quote('', 'M')arket comment
Gold: Trading largely sideways yesterday between 640 and 645, gold nevertheless closed firmly again just shy of the highs at 643.50. Buying interest starting in Asia continued throughout the day at the lower end of the range with some profit taking at the top end. Supported in NYC by firmer crude prices on Iran supply concerns, gold ultimately suffered after the close as Bernanke’s comments on inflation concerns gave a boost to the USD as further rate hikes were perceived more likely. Gold then is likely to remain
below resistance in the very short term as inflation prospects are weighed and re-evaluated with 645-650 still the key level to turn the outlook more positive again and 675 the focus for renewed appreciation.

Silver: Opening higher in Asia, silver then also traded in a narrower range yesterday, largely between 12.17 and 12.36. The morning’s buying interest gave way in NYC and silver posted it’s lows in the afternoon’s trading session. The trend lower continued after NYC close as gold fell and pulled silver lower again to 12.10 area, with silver testing 12.00 in European trading this morning. Physical and other consumer bargain hunting on the lows will be needed to maintain the current move as a correction.

Platinum: After a slower start, platinum followed gold and silver higher initially but plateaued short of 1,260. A quieter trading day and a ranging market gives little direction after last week’s falls. Platinum might be expected to take further cues from silver and gold in the short term until consumers or investors become more active.

Palladium: Similarly, palladium followed platinum’s example yesterday. The metal traded in a 350-60 range but generally ended firmer on the day and faces resistance here from a meeting of short term moving averages.