Last week September Crude Oil opened at $87.52 and closed the week at $91.83.
Looking back at the price action on the daily chart below, look at Thursday, June 28 as crude closed that day at $78.10. The following day, Friday, June 29 September crude closed at $85.37, climbing $7.27 on the exiting news from the EU summit that EU officials had a plan in place to solve the debt crisis. I was shocked at all of the markets responding the way they did that day, after all how many plans have been agreed upon in the last two-plus years that really never got off the ground — 15?, 20? June 29 was a day of unjustified exuberance. Just look at the EU today.
Technically on the daily chart we see the crude move up from $84 has become a strong trend with ADX at 37.4 and will drop with today’s price action. MACD is bullish but dropping divergence today and Stochastics were in deep overbought territory but are coming down from there today.
Proceed to Page 2 for the latest COT Data...
Could something be happening with “big money” that is helping push up crude? You better believe it. Looking at the disaggregated COT report, take a good look at Swap Dealers. For one thing, look back to when they first entered net short territory. Look what has happened since. They have become strong hedgers in crude. Just look at Producers liquidating net shorts and Swap Dealers adding to net shorts. Pretty amazing isn’t it.
Most recently, back on June 29 Swap Dealers were net short -74,353 contracts and as of this past week they are now net short -108,773 contracts. Producers, the other hedgers, were net short -47,521 contracts on June 29 and as of this past Friday are net short -57,403. So, who is now the heavy hedger in crude?
On the buy side Managed Money was net long 99,765 contracts on June 29 and is now net long 115,229 contracts. Surprisingly “Other Reportables” were net long 13,068 contracts on June 29 and are now 57,550 contracts net long. So over the past month we have seen increased buying and selling by “big money.” And what do you see happening to crude prices?
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.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.
Proceed to Page 3 for this week's detailed fundementals...
So what about US crude inventories? Last week the EIA.gov site report inventories at 377.4 million barrels, which was a drop of 800,000 from the previous week, but 25.7 million barrels higher than the same time last year. Better yet, gasoline inventories dropped. Wonder why? Last year week ending July 15, 2011 the US exported 148,000 barrels of gasoline. This year week ending July 13, 2012 the US exported 833,000 barrels of gasoline. And you may not have heard, last year North Dakota was the fourth largest producer of crude here in the States. A few weeks back it moved into number two passing California and Alaska.
Have a prosperous week.
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