[Daryl]

$this->bbcode_second_pass_quote('MrBill', ' ')

Measuring back from 2001 in the silver, I get a 0.382R from $4 area to $15 area as being around $10.50 and the 0.500R as being near $9.50, although based on the momentum it might easily go back to the 0.618R of $8.10 or so? Therefore, would look to buy between $9.60 and $8.25 if that is the way you're bent?

Measuring back from 2001 in the gold, I get a 0.382R from $260 to $730 area as being around $540 and the 0.500R as being near $490, but unlike the silver there seems more support and a pullback to the 0.618R of $430 seems highly unlikely? One would think that $500 would be a big psychological level for the bulls? Then they would double their money when it spikes to $1000? ; - )

[MrBill]

Brent goes off the boards this week as we are near the low side of the trading band for the past couple of weeks. Another attempt yesterday to break through support under $6650, but no follow through and we popped back up above $6700 again. Sets up a dilemma as that is roughly $6840-6875 in the August, so on the continuation charts will be hard to stage a technical rally with support almost 200 basis points lower without the help of the products or a bullish headline.

Although I like the idea of buying down here, especially with Brent at a 225 point discount to WTI, I am afraid the $6650 area will act like a magnet for the August once July retires. Plus, as I mentioned yesterday, although the channel support is somewhat below here, on the trading envelopes the oversold area begins around these levels.

Yesterday's DOE numbers came in decidedly bearish, so perhaps I should just stay with the trend until a clearer picture emerges?

Crude -900K bbls to 345.7 mio bbls
Gasoline +2.8 mio bbls to 213.1 mio bbls
Distillates +2.1 mio bbls to 112.8 mio bbls
Refinery Runs +1.7% to 92.7%

TTL MPTS -334K to 10.55 mbpd
PROD MPTS +187K to 3.78 mbpd

TTL DMD +2.1% YOY to 20.89 mbpd
Gasoline DMD +0.6% to 9.35 mbpd
Distillate DMD unch'd at 4.05 mbpd

Summary: Product builds despite increased demand, and the EU's foreign policy chief Javier Solana reported that he had constructive talks with Iran's Ali Larijari over the proposed carrots & sticks that were served-up to them last week, perhaps indicates that we are in for a period of consolidation with a weaker bias until the first storm hits the GOM? On the otherhand, getting some support from precious and base metals today as well as the ags, so the brunt of the short selling seems to be subsiding at least for the moment.

RE emerging markets Daryl. Agree if you pick some like Russia that have strong external fundamentals and are commodity & energy exporters. They should outperform Turkey and some weaker EM players that have current account deficits and are exposed to higher global interest rates.

[Daryl]

$this->bbcode_second_pass_quote('MrBill', ' ')
RE emerging markets Daryl. Agree if you pick some like Russia that have strong external fundamentals and are commodity & energy exporters. They should outperform Turkey and some weaker EM players that have current account deficits and are exposed to higher global interest rates.

[truecougarblue]

I went long before the close yesterday on GLD and two miners, HL and CDE.

Looks like I got that one right, I've locked in some gain and will now follow them up with a sloped stop loss. The depth of this correction has me not all that certain as to whether a rally will shape up in the AU, but it looks due to me.

[MrBill]

Talking to the investment banks like ML & GS there is some serious money flowing back into the emerging markets and some of the asset classes that got whacked, plus more M&A activity, at least unsolicited bid in any case, so this market shook some money out of the trees. Seeing some nice rebounds in markets that got really sold-off which is a good sign.

I jobbed the crude around today and took some profit out of a tight range. I think I am going to leave it alone now although I see we are bouncing again off the previous support level and the metals and commodities are all pretty much up on the day with only a few exceptions.

I am off early tonight to watch some World Cup Football with the boys and do not feel like getting involved and having to think about it. Plus, been hectic to line-up new funding and make margin calls, so need a night-off. No use living in Cyprus and earning less if I have to work as hard as those poor souls in New York and London! ; - )

If anyone is thinking of buying ethanols, I think this article is a wake-up call. Think of it this way. The money that flowed into the Dot.Con Bubble helped pave the way for some genuine innovations, but a lot of that equity was lost and did not make the late entry shareholders any profits. It was a subsidy. The same for ethanol. Easy money flowing into that sector will build plants, but then those plants have to compete against one another and against the Brazilians and their sugar cane as well as against traditional oil & gas and there is simply no guarantee that any one factory or company or even the industry will make money for their shareholders. But if you believe in it, you can make your donation towards an Alternative Future.

Sorry no link so re-printed in full.
$this->bbcode_second_pass_quote('', ' ')June 15 (Bloomberg) -- Mark Oberle, chief financial officer
of ethanol maker Corn Plus LLP, is sitting out his industry's
biggest building boom in a quarter century, and Microsoft Corp.
Chairman Bill Gates may wish he'd done the same.
Within two years, planned expansion by ethanol producers
will push U.S. supplies past demand, according to Standard &
Poor's. ``The danger of a glut is very real,'' said J. Stephan
Dolezalek, a partner at San Bruno, California-based VantagePoint
Venture Partners, a venture capital firm with stakes in three
Midwest distilleries.
Overproduction may make investments such as Gates's $84
million stake in Pacific Ethanol Inc., which hasn't produced fuel
yet, go sour. The same may be true for shares of VeraSun Energy
Corp., which this week raised $419.8 million, more than expected,
in its initial public offering.
``I just hope it turns out all right for those shareholders
and that it's not a fad,'' Oberle said in a telephone interview
from the company's distillery in Winnebago, Minnesota, about 100
miles southwest of Minneapolis. ``They would've got better odds
in Vegas.''
Producers are planning to expand after ethanol prices soared
to records in response to government rules requiring more of the
additive in gasoline. President George W. Bush and former Federal
Reserve Chairman Alan Greenspan also have said ethanol may be an
alternative to fuel made from petroleum.
``The feel-good factor in the ethanol industry is very high
right now,'' said Venkataraman Sreekanth, manager of North
American energy analysis at Frost & Sullivan Inc., a San Jose,
California-based consulting company.

Ethanol Investments

The average U.S. ethanol price rose 95 percent this year,
touching a record $3.61 a gallon on June 13. That compares with a
32 percent rise in retail gasoline prices and a 13 percent
increase for crude oil.
Investors poured $14.3 billion into U.S. ethanol stocks in
the last 12 months, according to data compiled by Bloomberg. An
index of alternative-energy stocks rose 26 percent in the past
year, dwarfing the 16 percent gain for the Amex Oil Index, which
includes Exxon Mobil Corp and BP Plc, the world's largest
petroleum companies.
The stock market valuation of Fresno, California-based
Pacific Ethanol, which plans five plants on the West Coast,
doubled this year. Gates's Cascade Investment LLC bought its
stake in April.
The VeraSun offering, the largest ever by a U.S. company
solely dedicated to ethanol production, will finance expansion.
The company's shares surged $7, or 30 percent, to $30 in their
first day of trading yesterday on the New York Stock Exchange.

Enthusiasm

Two other distillers -- Hawkeye Holdings Inc. and Aventine
Renewable Energy Holdings Inc. -- hope to tap that investors'
enthusiasm later this year with their own initial share sales.
Hawkeye, controlled by Boston buyout firm Thomas H. Lee
Partners LP and based in Iowa Falls, Iowa, is the No. 3 U.S.
ethanol maker. No. 4 is Pekin, Illinois-based Aventine,
controlled by Metalmark Capital LLC, the buyout firm spun off
from Morgan Stanley in 2004.
Demand for ethanol, a form of alcohol derived from grain or
sugar, has also soared as U.S. gasoline refiners use it to
replace MTBE, an additive that at least 28 states blame for
polluting groundwater. In addition, the Energy Policy Act signed
by Bush in August requires refiners to almost double ethanol use
to 7.5 billion gallons a year by 2012.

New Production

Thirty-seven of the 110 U.S. ethanol companies plan to add
2.2 billion gallons of new production by the middle of 2008, a 49
percent increase, Elif Acar, an analyst at Standard & Poor's in
New York, said in a June 8 note to clients.
Supply may exceed demand by as much as 1.3 billion gallons,
or 24 percent, within two years as production accelerates, Acar
said.
``Ethanol prices are so high that people are making a ton of
money, but things this good don't last that long,'' said Kevin
Buente, who helps oversee a $2 billion portfolio of loans at 1st
Farm Credit Services. ``There's a lot of New York money coming
into this market now and, I'm sorry to say, they will probably
overdo it.''
The surplus envisioned by Acar could grow if oil prices
fall, stifling demand for ethanol as a gasoline extender, or if
the federal tax break for oil refiners using ethanol is allowed
to expire in 2010, the analyst said.

Bad Bet

``There is a risk of enthusiasm getting out ahead of
deployment,'' said Dolezalek at VantagePoint.
Oberle, the CFO at Corn Plus, said expansion seems like a
bad bet because in the two years it would take to build a new
distillery rivals may have glutted the market, robbing him of the
high prices needed to cover the construction debt.
Instead, Oberle has been funneling profits into new
equipment to make the plant more efficient, including a $20
million boiler that burns corn syrup, a byproduct the company was
giving away to livestock farmers before. The boiler has cut Corn
Plus' natural-gas costs in half, he said.
``We have to do these things now while the cash is
available,'' Oberle said. ``Because prices are high, everyone's
awash in cash, but it isn't going to get any better than this.''

[Bewildebeest]

If the Fed raises the interest rate on Aug 29 as Bernanke has indicated, will the dollar rise further, or has it likely already gotten all the bounce it will get simply from the expectation of a rate increase?

[MrBill]

$this->bbcode_second_pass_quote('Bewildebeest', 'I')f the Fed raises the interest rate on Aug 29 as Bernanke has indicated, will the dollar rise further, or has it likely already gotten all the bounce it will get simply from the expectation of a rate increase?

[MrBill]

$this->bbcode_second_pass_quote('Bewildebeest', 'I')f the Fed raises the interest rate on Aug 29 as Bernanke has indicated, will the dollar rise further, or has it likely already gotten all the bounce it will get simply from the expectation of a rate increase?

[MrBill]

A broad, but not spectacular rally in the precious metals is lending some support to the energy complex, while agriculturals and base metals seem to be in a funk today. Gold no doubt getting a little support from a weaker dollar on the back of likely interest rate hikes in Japan. Yes, I know what I said yesterday, but that is the BOJ for you. "HAHA! We screw you good round eyes!"

So bit confusing to say the least as dollar weaker not on Fed expectations of a rate hike slowdown, but the BOJ just living up to past rhetoric, so definately not inflationary and will likely lead to lower global growth as a result. Hence, why the base metals are not as shiny as their precious cousins.

Some weather in and around the Gulf disrupting some loading and unloading activities, but not a serious interuption, and gasoline inventories are forecast to expand again tomorrow for the 8th week running. Clearly, there is no shortage as we reach three year averages and the effects of higher interest rates bite into growth expectations. In a report this morning, Lehman Bros. announced that they expect Fed funds of 5.75% this year, up from their previous 5.25% forecast that seemed hawkish 6-months ago, but now looks like a done deal.

My feeling is a little range trading until something happens to give us direction? Maybe sum Kim Sun II or someone else will shoot a rocket over Japan and send the shivers through Asian markets? Better yet, lob one at Alaska. That would get the world's attention, Mr. Hermit King!

In the meantime, employing Mr.Bill's 100 Point Rule, we should see resistance at $6850 in the Brent (acheived) and $69.70 in the WTI ($69.40 high so far). I bought a little on the upswing this morning and then reversed my position when the rally stalled. However, I am not married to my position, so will keep a tight stop if we blow through on the topside? Good luck and speak to you later.

UPDATE: HA! Broke through my resistance levels already. Ah, mice & men! ; - )

[MrBill]

It's de je vu all over again! Same starting point as yesterday morning having covered 280 points worth of ground. It reminds me of the adage that 'a man can drown in a river that is on average only three feet deep!'

I made some money on the way up, then sold and was stopped out, then sold again near the top and took my losses back, but cut my short far too early in the end. Could have squeezed it for another 100 points, if I would have had the balls of Germany. Oh well, like England, a draw is as good as a win, and I am still alive for the next stage of the match.

The question is what to do from here? There is a broad based recovery in all the commodities this morning. Nothing large, just solid up across the board. Perhaps on a dollar that is slightly weaker against the euro and a rebounding yen? No other headlines that I can see?

Today's DOE inventories will either cause us to correct higher, say if gasoline inventories do not come in higher or if imports slip, but more likely will propel us to the bottom end of the channels that would be around $65.00-$66.00 in the WTI and $65.50 in the Brent. The technical signals in the Brent are stronger and clearer than on the WTI charts. I think to reach these levels we need a strong build in gasoline inventories for the 8th week in a row, no outages or storm related damages, and no reversal of the relative calm that we have had on the geopolitical side recently. Still, this is within the context of a rising channel on the longer term weekly charts and does not signal a breakdown in price altogether.

Today's DOE forecasts are

Crude +0.40 mio to 346 mio vs 327 mio YOY & 3 yr ave 306 mio
Distillates +1.3 mio to 124 mio vs 112 mio YOY & 3 yr ave 110 mio
Gasoline +1.0 mio to 214 mio vs 216 mio YOY & 3 yr ave 210 mio
Refinery Runs +1.0% tp 93.7% vs 94.8% YOY

A comfortable build of 2.7 mio boe given that OPEC and the IEA feel that high prices and the effects of higher interest rates are already eating into final demand. Should in any case cause the market to revert to a wider carry as prompt delivery demand no longer seems to be an issue in the gasoline market. However, going forward backwardation is evident in the back dated months likely as MTBE tainted gasoline falls out of fashion in favor of the new ethanol laced RBOB contract.

$this->bbcode_second_pass_quote('', 'T')he dollar declined for a second day on speculation further interest-rate increases by the Federal Reserve will cool growth in the world's biggest economy.

The currency extended its slide this year to 2.6 percent against the yen and 6.1 percent versus the euro before economic reports tomorrow that will probably add to signs of a slow down. Economists surveyed this month cut forecasts for expansion this quarter by half a percentage point. Traders have increased bets the Fed will lift rates next week and in August.

``Amid growing concern about the slowing U.S. economy, the dollar seems to be losing momentum,'' said Saburo Matsumoto, a strategist at Sumitomo Trust & Banking Co., a unit of Japan's third-biggest lender by assets. ``The interest-rate differential alone isn't enough to push the dollar higher anymore.''

[truecougarblue]

This morning's move in gold has me feeling pretty good about this rally. I got bumped out of my CDE yesterday but I'm still in the GLD and HL long and well above my stops.

If this is indeed a resumption of the bull, any opinions as to near term upward resistance levels on AU?

[MrBill]

Metals rebounding quite nicely today, and the precious metals are joined by their more base cousins on signs of continued strong growth in China. This along with less than expected builds in the gasoline have supported the crude on the back of wider crack margins, but I question where this rally is leading to?

As for gold, see support at $582 and the next resistance at $600 with an .382R fib retracement at $615, which would correct the move down from $740 to $540.

And in the silver, see support at $10.32 with the 0.382R at $11.65 to correct the move down from $14.80 to $9.40 area.

Then at least from the technical side they will have come back into their normal ranges from an excentuated move upwards, followed by a real drubbing on the way back down. Then from this neutral territory the shiny stuff will have to take its cue from inflation and interest rates as well as the strength of the greenback.

Talk about excentuated moves up, I have no idea what is driving the crude except for crack spreads that widened out, and a smaller than expected build in gasoline inventories, plus a slight drop in product imports? However, all were within the tolerance of week to week variations, and were part of the trend for larger builds in the crude and lower than normal seasonal draws in the products.

Nothing out of the ordinary, so I suspect other forces at work. It might be Bush's big mouth comments over Iran? The man just cannot shut-up, and he continues to paint Iran into a corner from which they cannot emerge with face saving grace!

Or in fact, it might be conjecture surrounding the likely launch of a rocket by North Korea, and what that might mean for six party talks with the Hermit Kingdom? In any case, I suspect some arm twisting as Japan said today that they would join in sanctions against Iran, despite commerical interests in Persia, perhaps in anticipation of needing a united response, and the support of the USA, if sum Kim Sun Too starts lobbing missiles in Japan Inc.'s direction and spooking a nascent recovery built on cheap credit?

As for me, not comprehending why we are up here this morning, I pushed some Brent futures out the door at just under $7000, and hope we might see a pullback to at least the $6950 area this morning before another concerted attempt higher later today. But as usual, I will yield to my fate and stop myself out should the market insist on pushing higher on the back of shadows, nagging doubts and dark clouds hanging over the future.

As for growth in China, strong producer profits seem to indicate that at least the large, state-owned and protected firms are having a grand old time of it at the moment, and seem to support the idea that we will see strong GDP growth of +10% in the Year of the Dog. That should be good for the commodities and help claw back some emerging market losses taken over the past month.

The summary of the DOE data is:

Crude +1.40 mio bbls to 347.1 mio
Distillates +1.9 mio bbls to 124.6 mio
Gasoline +0.3 mio bbls to 213.4 mio
Refinery Runs +0.6% to 93.3%

TTL DMD +0.8% to 20.89 mbpd
Dist DMD +1.1% to 4.08 mbpd
Gasoline DMD +0.9% to 9.41 mbpd

TTL MPTS +447k bpd to 10.99 mbpd
Prod MPTS -46k bpd to 3.73 mbpd

Today's nat gas storage numbers are forecast to be +70 to +90 bcf versus +79 last year and a five year average of +95 bcf


All in all a 3.6 mio boe build versus 2.7 mio boe expected, and the highest inventory levels since May, 1998, also known as The Golden Clinton Years, or alternatively the Year of the Tiger. So, I have no idea why the market decided to fixate on the slightly lower gasoline build, other than to say, that is what the market typically does, it discounts all current information and immediately starts looking for storm clouds over the horizon. That's why we lub 'em.


I dunno, I will take my chances on a retracement here and see if the 100 point rule holds this morning? What can you expect from someone born in the Year of the Rabbit? Speak to you later. Cheers.

[cube]

$this->bbcode_second_pass_quote('MrBill', '.')..
Nothing out of the ordinary, so I suspect other forces at work. It might be Bush's big mouth comments over Iran? The man just cannot shut-up, and he continues to paint Iran into a corner from which they cannot emerge with face saving grace!
...

[MrBill]

Well Cube, look at it this way, if Dubbya didn't say anything, then Michael Moore would feel compelled to make yet another lopsided docutainment film, and as amusing as that might be, it really would not go very far in helping us make sense of a world that is never black nor white.

However, you are right, in the absense of any obtuse oratory from the purveyors of hot air, the tendency is for the market to settle down and focus on the fundamentals. In this case a substantial supply overhang and little else to trade-off of at the moment? I have been selling successfully into rallies, and see no reason to change my strategy here today, except that it is Friday, and unless I want to stay late and keep an eye on my positions, I might just take advantage of an opportune move down to close out and call it a week?

Comments on the metals by DRKW
$this->bbcode_second_pass_quote('', ' ') Market comment
Gold: Despite a positive start to early trading yesterday, gold remained undecided in the 580-90 range and gave back some of the prior day’s gains. Led by a rebound in USD, weakness in base metals after the Asian strength and caution ahead of next week’s FOMC meeting, gold ran into selling at 594.50 and drifted lower for the remainder of the afternoon. The yellow metal finally closed on the lows at 582.30, and remains without clear direction in the interim with 600 a key resistance level to clear in order to reopen further upside potential. Support at 575.

Silver: Sister silver showed a sharper loss (down -2%) as early highs at 10.65 also found selling which pressured the metal lower to 10.20 as gold was sold down. Silver has not found the same support overnight as gold has, and dipped further to 10.05.

Platinum: Even platinum gave back gains made over the past couple of days. A strong start with Asian buying pushing the price to 1,200 petered out after the morning fix and in common with gold and silver, platinum headed lower over the afternoon. Also closing on the lows (1,178) platinum continues this morning to range between 1,160 and 1,180.

Palladium: The out-performer in the sector, palladium closed down just -0.20% close on close and held above 300. Indecision at these levels coupled with the weaker sentiment in other precious metals would argue for a sideways to lower outlook for the metal in the short term, with 300 a key area of support.

[MrBill]

Sorry, no real insights here today. The market has a weaker bias, especially since NY came in, but no follow through of note. The metals markets are generally weaker as well as the market starts to absorb the possibility of further rate rise in the USA as the BIS calls on other central bankers to join the fight against higher inflation.

Think we will see 25 basis points on June 29th followed by another 25 points in August taking us to 5.5%. However, longer term we will most certainly see Fed funds of around 6% either by year-end or in Q1'07.

I do not believe that Bernanke will risk another gaffe by going a fell half-point this month. Still higher rates in general will continue to deflate assets prices everywhere and as growth slows so should equity markets as well as demand for commodities.

In the meantime, crude is in a range until we see what is the outcome over Iran and N.Korea and if increased Iraqi output can make up for outages in Nigeria. Apparently flooding and more rain to come are affecting refining activities in the Gulf of Mexico, so another supply concern for the market, but as of yet muted.

Talk tomorrow. Cheers.

[MrBill]

Sorry no chance to contribute this week. Basically, with all the markets we cover staging a recovery was busy doing other stuff like reverse margin calls and collateral management that have diverted my attention away from my own trading.

Had a chance to jump on the back of some upward moves, but have been too quick to take profit, so have largely missed moves like today's. Oh well, Lukoil, ConocoPhillips, BASF, Gazprom, etc. have all performed very well since their exagerated drops several weeks ago, so it is gratifying to have bought while everyone was still heading for the exits even if I did not successfully pick the bottoms.

Basically, crude at at $73-73.50 as we speak on the back of a) drop in inventories and imports this past week as per yesterday's DOE numbers; b) a blocked canal and some flooding in the Gulf production area; c) Iran response to the nuclear enrichment proposals being less than what the world had hoped for; d) demand being up despite higher interest rates and pump prices at nine month highs; e) an expanding US economy despite those same factors; f) strong world growth despite clouds over the future; and g) a traditional long weekend during the driving season when no one particularly wants to aggressively sell the market short coming up.

So nothing new then, just a confluence of supportive factors that are keeping crack spreads bid and crude prices high. As the week has progressed the mood has switched from sell on rallies to buy on dips as has roughly been the case in the other markets like base and precious metals as well. I feel bad about not being more aggressive, but what can you do? You cannot catch every move and sometimes other tasks take priority.

Hope to be back in it tomorrow. Cheers.

[cube]

That contract that I had for 71.00 long is looking mighty good right now. Too bad I sold it last week.

Maybe I'm going out on a limb here but I think there's enough momentum to reach 80.00 sometime in July. I've botched my chances this week so I'll wait till the beginning of July to catch the wave and ride out whatever is left.

see you guys next month.

[Chaparral]

Took quick n' dirty profits on the Yen and the Loonie. Shorted the hell out of wheat. Took profits on HU-N06 at 21600. Got long on HU-Q06 at 21750 against my better judgement but on the expectations that it would hit 22100. Got out at 22000. Set a few fill or kill orders to sell at 22350; still haven't gotten fill confirmation. Set a limit ord to sell CL-Q06 at 7360..nuttin yet. Took a hosing on July silver. Today was the day to close or prepare to take delivery. My back is too old and sore to hump 180 kgs of white metal around but if it came in 10 oz bars, I could easily recoup my loss on ebay.

I've been too scared to try shorting nat gas. I'd wanted to go long on coffee and cotton but I've too many things to watch as it is.

What really irritates me is that we can no longer use limit orders for NY unleaded. It has to be market or fill or kill ords. I used to set limit orders in the morning based on where I thought it'd go and then if they got filled, I'd set limit ords to close out based on a reasonable target. I could then walk away from the computer for a while and do other things. It was a stupendously profitable enterprise. Now I have to stay closer to the computer.

Oh, and the rationale for the COMEX eliminating daily price fluctuation limits on the metals has nothing to do with the illuminati, bilderbergs, UFOs or Elvis; apparently when NY shut down, trading immediately switched to the CBOT, which is now taking 50% of NY's business. The exchange simply doesn't wish to lose business to the competition.

[MrBill]

I can sympathize with you. My PC that ran my livefeeds from Reuters3000 went down this week and I lost all my data. Had to replace the PC and rebuild all my pages. Was a real hassle. I am glad now though because I had a chance to change them for the better. Now I think I have my pages better organized so that I can stay on top of moves in related markets. Maybe it helps give me an edge in the crude as well? We'll see.

Still have problems with my Internet at home, so I cannot monitor the markets from home, and lost the functionality to leave stop loss orders on the ICE via my e-platform, so also either had to walk away without a stop loss, very dangerous, or close my position everytime. Therefore, also missed some of these juicy moves. What can you do? Slaves to our technology. I really do not like to not leave a stop loss and now that I moved completely over to electronic trading really do not use my brokers much anymore, so they are also not exactly keen to watch only stop loss orders for me.

However, have just opened new accounts at GS, so may see if they are better or how I can change my approach? Half a year over and I am behind plan on my oil trading, so have to kick it into high gear here. Thankfully emerging markets and oil company stocks came racing back here ahead of the end of the quarter.

Markets look generally bid here. At already high levels, but now that the 25 bps hike from the FED is out of the way at least it removes the uncertainty. Therefore, ahead of the July 1st Canada Day long weekend (well, July 4th, too) I guess there will not be too many aggressive short sellers out there, but if anything a little profit taking to lock-in gains. Good luck and if we do not talk have a nice long weekend! Cheers.

[MrBill]

Base metals up strong here. LME copper rallies 4.3% on fundamentals on positive US economic outlook.

Here are some crude comments by Jim Ritterbusch from PruBache
$this->bbcode_second_pass_quote('', ' ') Crude/Products:
Additional refinery problems and an associated huge pop in the crack spreads provided the main feature to today’s trade, as has been the case through most of this week. The heating oil market generally kept pace with the upsurge in the gasoline for a change in the deferred months as east coast flooding concerns and a couple of PADD 1 refinery snags spurred some buying into the distillates.

While we would expect some lost distillate production due to the reported Sunoco problems, supplies are expected to remain at a near burdensome level as partially reflected in an extremely wide carrying charge of more than 6 cents in the front heating oil switch. Notwithstanding the refinery glitches, we are still viewing the huge carrying charges as symptomatic of extremely limited storage availability in the NYH area. These large supplies will make the heat cracks quite vulnerable to significant contraction next week assuming no additional refinery problems over the extended holiday weekend.

Today’s furthered gasoline price strength that easily cleared our revised upside target of $2.27 in the July contract, appeared primarily fed by the additional snags in the New Jersey and Philadelphia regions. Buying interest has been accentuated by a defensive posture on the part of the remaining July unleaded shorts ahead of tomorrow’s abbreviated session expiry and ahead of a long 4 day weekend that could bring additional refinery news. The August gas cracks approached the $21.00 mark and show no evidence of a peak. However, some softening could begin to develop as early as tomorrow if the Calcasieu ship channel in Louisiana is able to reopen to limited ship traffic. A partial reopening was delayed this afternoon, providing a further boost to gasoline futures.

Despite a number of headlines today such as a potential July 5th deadline for an Iranian response to the UN’s latest statement on the nuclear issue, the Feds decision to boost interest rates by 25 basis points and yesterday’s reported 3.2 mb crude stock draw, the main driver to the crude prices continues to be the upward pull from the products. In this type of situation in which refinery snags are dominating product strength, the flip side of these developments, of course, is that crude is being backed away in some areas. This can place pressure on the nearby contract in relation to deferred months in spite of strong price advances in excess of $1.00/bbl as seen today.

In Europe, where refinery problems have not been a major issue, the comparably timed August/September Brent spread is trading at about 40 cents. All in all, we view the crude market as vulnerable to a significant downside move following the holiday break. However, such a decline will require cooperation from lower gasoline prices and the implied liquidation of gas cracks will tend to cushion any crude losses going forward.

The natural gas market was again able to shrug off the sizable gains in the oil complex with the help of bearish storage statistics. The weekly data indicated a 66 bcf injection, a figure about 5 bcf above average street ideas. However, a more important bearish
consideration, in our opinion, is the lack of either hot temperatures or significant tropical storm developments in the 1-2 week weather forecasts. Within such an environment, a supply overhang, that remains at more than 600 bcf against 5 year averages with today’s
figure, becomes a significant bearish item.

Furthermore, we feel that today’s weakness represented some spillover from yesterday’s weak expiration of the July contract. While not ruling out some price strength tomorrow due to end of quarter positioning and ahead of a long weekend that could bring significant shifts in the weather forecasts, we are leaving open the possibility of a test of yesterday’s July futures lows of $5.81 by next week.