Last week March crude oil opened at $97.74 and closed the week at $98.67, staying within its current range of $102-$96.
With the Greek passing of their austerity package and more rumbling from Iran, today we see March crude oil trading over $100.
I tweeted a very interesting article over the weekend that I read called “Americans Gaining Energy Independence.” If you have not read this, I highly recommend it. Also do you know the USA’s #1 export for 2011? If you said refined fuels you are correct. Yes, America sold globally more unleaded gas, diesel and jet fuel than any other item — approximately $88 billion worth.
On the technicals, on the daily chart below we see ADX at 17 reflecting a weak trending market, confirming a range. MACD is just crossing up over the signal line with no divergence. Looking at last week, we see Stochastics corrected from oversold territory, are now midrange and rising. Look at how open interest has risen. Who or what is causing this?
Proceed to Page 2 for the latest COT Data...
COT Data
Take a good look at the weekly chart below. First, the top COT report is the older legacy report showing Commercials net short -201,157 contracts. This is the difference between their long positions, which were 620,629 contracts, and their short positions, which were -821,786 short. Large Spec showed a net long position of 168,885 contracts. This is the difference between 315,171 contracts long and -146,286 contracts net short.
But to get the true picture of “big money” look at the Disaggregated report. You now see Swap Dealers have a net short position of -122,252 contracts. This is the difference of 165,410 long contracts and -287,662 short contracts. Producers (true commercials) come in at -78,905 contracts net short, which is the difference between 245,608 contracts long and -345,513 contracts short. When comparing with the legacy report you will see these two net figures add up the -201,157 contracts net short. If you try to calculate the longs and shorts to compare with the legacy, you will see a difference of 209,611 contract on the long and short side. That is how many spreads the Swap Dealers are currently holding and they need to be added to the longs and shorts of the legacy report. Producers (true commercials) do not hold spreads. Managed Money is the only group net long at 173,469 contracts. This is from the difference between 211,129 long contracts and -37,660 short contracts. MORE importantly look how the Swap Dealer for the first time ever started into net short territory the fourth quarter of 2010. And now we see Swap Dealers sitting on a larger net short position than Producers, another first. If you trade energy options, futures or ETFs and you are not looking at this information, you will not see the bottom line of what moves crude oil — “big money.” It is as easy as just opening your eyes and looking at the right information.
Also watch the dollar. Remember crude would not have been trading at $147 a barrel in 2008 with the US Dollar Index at 80.
|
Commodity |
12-mo low |
12-mo hi |
10-Feb |
3-Feb |
|
Cattle (feed) |
-1,889 |
5,543 |
-1,889 |
-1,545 |
|
Cattle (live) |
-40,877 |
10,437 |
-27,358 |
-20,581 |
|
Hogs |
-46,574 |
21,270 |
-17,884 |
-10,784 |
|
Corn |
-413,915 |
-36,487 |
-110,142 |
-100,112 |
|
Oats |
-7,738 |
290 |
-997 |
290 |
|
Soybeans |
-193,048 |
28,178 |
-42,160 |
-18,996 |
|
Soybean meal |
-76,105 |
32,081 |
-6,240 |
4,796 |
|
Soybean oil |
-91,423 |
29,745 |
1,199 |
20,335 |
|
Wheat |
-21,061 |
87,922 |
60,927 |
-11,802 |
|
Orange juice |
-22,341 |
-9,769 |
-15,222 |
-15,395 |
|
Coffee |
-41,624 |
1,153 |
-9,569 |
-7,132 |
|
Cocoa |
-41,808 |
10,252 |
9,006 |
3,116 |
|
Sugar |
-208,312 |
-25,626 |
-64,569 |
-72,748 |
|
Cotton |
-43,495 |
-2,152 |
-23,509 |
-25,093 |
|
British pound |
-66,435 |
88,682 |
41,719 |
40,280 |
|
Canada dollar |
-115,190 |
25,942 |
-18,274 |
6,645 |
|
Euro FX |
-124,855 |
197,616 |
165,164 |
183,925 |
|
Japanese yen |
-64,864 |
76,983 |
-50,221 |
-53,061 |
|
Swiss franc |
-42,387 |
26,491 |
15,653 |
14,935 |
|
US dollar index |
-53,158 |
14,003 |
-37,570 |
-44,432 |
|
Mexican Peso |
-140,414 |
39,901 |
-35,867 |
-22,088 |
|
Australian dollar |
-110,025 |
479 |
-89,774 |
-88,177 |
|
S&P 500 |
-77,473 |
73,398 |
-27,983 |
-28,683 |
|
T-note -10 yr |
-49,750 |
229,611 |
109,577 |
83,967 |
|
T-bond -30 yr |
-20,389 |
88,803 |
18,104 |
16,517 |
|
Eurodollar |
-408,407 |
1,126,194 |
-87,592 |
-104,346 |
|
Crude oil |
-319,669 |
-114,385 |
-201,157 |
-201,460 |
|
Heating oil |
-53,631 |
-4,204 |
-53,631 |
-44,042 |
|
RBOB Gasoline |
-101,596 |
-38,417 |
-101,596 |
-96,348 |
|
Natural gas |
101,596 |
228,910 |
101,596 |
104,416 |
|
Copper |
-35,687 |
14,419 |
-4,578 |
-1,225 |
|
Gold |
-287,634 |
-159,153 |
-221,072 |
-209,862 |
|
Platinum |
-35,249 |
-18,670 |
-29,948 |
-29,472 |
|
Silver |
-57,793 |
-14,132 |
-34,650 |
-28,729 |
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 NEW COT report to your benefit get instant access to my new e-book “What Lies Beneath ALL Trends”. It is filled with eye opening information.
Proceed to Page 3 for this week's detailed fundementals charts...
Fundamentals
Crude oil prices are trading modestly above their recent 1-1/2 month low but below $100 a barrel. Bearish factors include:
- 1. The larger-than-expected increase in weekly DOE gasoline supplies to their highest level in 11 months (+1.63 million bbl to 231.8 million bbl).
- 2. The action by the U.S. Energy Department to cut its 2012 U.S. gasoline demand forecast to 8.71 million barrels a day, down -30,000 bbl from a January projection of 8.74 million barrels a day.
- 3. Concern that U.S. fuel demand may remain constrained after Fed Chairman Bernanke said the U.S. has "a long way to go before the labor market can be said to be operating normally.”
- 4. A report from the IMF that warned economic growth in China, the world's second-largest consumer of crude, may be cut in half if the European debt crisis worsens.
Bullish factors include:
- 1. The fall in the U.S. Dollar Index to a two-month low, which boosts investment demand in commodities.
- 2. Carry-over support from a rally in heating oil to a nine-month high as the extreme cold snap in Europe boosts the prospects for increased U.S. exports of heating fuels.
- 3. Geopolitical concerns after a Washington Post article said U.S. Defense Secretary Panetta believes there is a strong likelihood of an Israeli military strike on Iran by the end of June to thwart Iran’s nuclear program.
Fundamental outlook — Neutral — Crude oil prices rose modestly above their recent 1-1/2 month low and turned the trend to neutral on dollar weakness and possible increases in heating fuel exports to Europe. Oil prices also remain supported by U.S. economic strength and geopolitical concerns with Iran’s threat to preempt a European oil embargo by cutting off supplies to Europe. Medium-term bearish factors include:
- 1. Increased OPEC and record Russian crude output
- 2. Global economic concerns
- 3. The resumption of Libyan production.
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