Oil in a crude dilemma

Market Pulse: Apr. 18, 2011

COT Data

Well let’s see exactly how “big money” is moving around in crude. First, in the older legacy report we see Commercials this past Friday -287,470 contracts net-short. Back on March 4 we did see Commercials at a 52-week net-low of -319,669 contracts net-short. To get a much clearer view of the “elephants” in the room, look at the disaggregated report below. There you can see that this past week Producers (true commercials) were net-short -210,689 contracts and Swap Dealers were net-short -76,781 contracts. On the other side of these trades is Managed Money coming in 251,247 net-long. Look at the weekly chart below to see how Swap Dealers first got net-short in November and have added to their net-shorts ever since. Over the past 5-years, Swap Dealers always had a high net-long position. So what we are seeing is that Producers started liquidating their net-shorts starting in September 2010. Swap Dealers moved to counter this liquidation and have become what looks like hedgers in crude. Or as speculators, Swap Dealers are extremely bearish crude. I’m guessing hedgers as you can see how the price has moved up since their actions.

I have yet to see the oil industry play the “peak” oil card like they did back in 2007 and 2008, pushing oil to the high of $147.00 per barrel in July 2008. Adding that to the media frenzy would have the same results. If you do not recall, five-months after the high was hit, oil dropped to below $40 per barrel. OPEC had a problem with this as well as Canada, who provides us with 25% of all our imported oil. Upsetting our neighbors to the north would be worse than upsetting the Middle East.

Market Pulse contest question: Which U.S. state is the fourth largest oil producer in the United States? All correct answers emailed to me, Gary Kamen, at GKamen@crbtrader.com will receive a free set of CRB Historical Charts covering 45 markets.

Don’t forget to get your taxes in today, Monday April 18 and have a prosperous trading week.

Commodity

12-mo low

12-mo hi

15-Apr

8-Apr

Cattle (feed)

-2,895

7,100

392

181

Cattle (live)

-73,179

-17,850

-30,852

-28,976

Hogs

-38,039

836

-33,527

-35,864

Corn

-408,170

119,389

-359,534

-330,074

Oats

-7,738

829

-4,868

-4,262

Soybeans

-203,260

34,246

-119,648

-142,779

Soybean meal

-90,487

-28,876

-39,370

-50,273

Soybean oil

-117,444

32,394

-84,638

-86,595

Wheat

-32,577

74,638

-3,684

-3,311

Orange juice

-18,285

-6,588

-12,862

-11,414

Coffee

-47,729

-4,637

-31,968

-28,520

Cocoa

-41,808

8,586

-22,684

-23,863

Sugar

-221,694

-104,983

-135,670

-163,579

Cotton

-69,857

-12,970

-33,281

-28,158

British pound

-66,435

97,211

-48,892

-45,318

Canada dollar

-115,190

-13,109

-100,255

-100,504

Euro FX

-82,714

124,494

-82,714

-76,545

Japanese yen

-52,533

92,866

76,983

61,994

Swiss franc

-42,387

27,482

-33,223

-27,940

US dollar index

-32,653

14,003

9,604

11,295

Mexican Peso

-130,987

-14,488

-130,987

-125,980

Australian dollar

-110,025

-10,793

-108,259

-110,025

S&P 500

-88,893

33,981

-45,459

-51,515

T-note -10 yr

-74,761

285,470

205,327

201,986

T-bond -30 yr

-43,324

129,217

88,803

80,224

Eurodollar

-1,179,414

105,872

-158,224

-128,627

Crude oil

-319,669

-23,057

-287,470

-289,021

Heating oil

-66,097

7,568

-43,460

-50,846

RBOB Gasoline

-91,597

-10,453

-73,603

-77,973

Natural gas

111,345

228,910

167,588

150,447

Copper

-36,201

1,793

-35,687

-27,840

Gold

-302,740

-193,197

-253,688

-258,665

Platinum

-34,909

-15,759

-27,456

-24,703

Silver

-65,413

-43,146

-51,279

-56,414

Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.

If you need help understanding how to understand how to use the COT report to your benefit, please email me at Gary@crbtrader.com and put COT report in the subject line. Please include your name and telephone number in the email.

Proceed to Page 3 for this week's detailed fundementals charts...

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