Commodities Spread Betting February 2011
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A regular Commodities spread trading update by Simon Denham of Capital Spreads. For the latest Commodities spread trading update, click here.
Commodities Spreads, 11 Feb 2011
We've commented quite a bit on inflation in this comment so far in 2011, but the issue is becoming more problematic for the Bank of England as time goes on.
World food prices have hit another record high following a lowering of stock pile estimates by the US Department of Agriculture. The bottom line is, following a disastrous harvest in 2010, there simply isn't enough food to go around.
Last year saw export restrictions of many soft commodities and prices spiked dramatically. The stocks have never recovered and we need to see a bumper crop in 2011 in order to at least put a cap on the rising prices.
If we see similar weather conditions this year to those of last year, we could see food prices double again from their existing levels.
This will have a huge impact on the global economy and in particular the poorer nations.
Cotton keeps marking new record highs and cereals such as corn, wheat and soybeans are back at their 2008 highs. A simple case of supply and demand i.e. not enough supply to meet the high demand is causing prices to rise. All eyes will be on weather conditions from now to April in Latin American, then March to May in Europe and North America.
Gold recovered from earlier losses finding support just above $1350 and settled above $1360. The precious metal is at $1364 this morning and so support and resistance remains the same with $1367.5 and $1380 to the upside and $1344/38 below.
Crude oil spreads enjoyed quite a volatile session with Nymex shifting around between $86 and $88. A break below $85 could be quite a bearish signal for crude prices as Nymex is drifting downwards following three failed attempts to rally above the $92/3 area.
Commodities Spreads, 10 Feb 2011
Gold is suffering from a bit of Dollar strength this morning and has retreated from above the $1360 mark. We’re at $1357 so bulls just having a respite following 4% of gains in the last ten days. $1344 and $1338 are near term support levels while yesterday’s high around $1367.5 will be watched closely and a move above here might open up $1380.
Crude oil spread betting prices are once again mixed with Brent in the black and Nymex in the red. Brent had a good run higher and is firmly back above the $100 level around $102.25, just off the two and a half year high it hit last week.
Nymex continues to languish in the mid $80s seemingly uninterested in Brent’s strength, but $85 remains an important support level for the crude contract.
Commodities Spreads, 9 Feb 2011
The gold spread betting market saw the bulls come back out to play as the Dollar struggled a little. The break back above $1362 and the big green daily candlestick formed yesterday is quite bullish for the precious metal so traders will be looking at upside levels such as $1370 and $1380 with support expected at the past resistance of $1356 and then $1344.
Crude was mixed with Brent seeing a little rise but the Nymex spread betting market falling. On the daily Nymex chart it looks rather like it’s formed a triple top around the $93 level, but the retracement to where we are now is on the upward trending line which might provide some support.
Commodities Spreads, 8 Feb 2011
The earnings season in the UK is just starting to get underway with Randgold yesterday benefiting from record high gold prices and Xstrata this morning seeing profit rise a staggering seven times. Mining stocks may not yield much, but they never received a bailout during the financial crisis and they truly are riding the wave of the commodity bull market.
Gold traded sideways and is at $1356 this morning. Friday's failed attempt at breaking back above $1362 has kept the bulls quiet for the time being, but with this morning's strength there's a chance we could push higher to test that level. Support remains at around $1344/6 which was past resistance so a break below here might lead to the $1330s again.
Brent crude oil was oscillating around $100 before it gave up the ghost after the FTSE closed and shed over a buck. This morning it's rebounding in conjunction with the strength in equity markets, so bulls will be attempting to get the black stuff back above the 100 mark.
Commodities Spreads, 7 Feb 2011
The effect of the Egyptian situation on the financial spread betting markets is muted apart from crude prices which have seen a sharp correction to the downside. The FTSE is just struggling to make any ground as investors fret over this week’s BoE interest rate decision on Thursday where there’s a small chance that they could raise rates.
Sterling has appreciated in the last few days as expectations for a rate rise soon have increased, but this Thursday is too early. Nonetheless the threat is there and, as the copper spread betting market hits a new record high, inflation concerns are at the forefront of traders’ minds.
Gold also saw its fair share of movement over the big US number and initially rallied before reversing the gains and settling just below $1350. This morning the precious metal is at $1349 so to the upside $1362 and $1370 are levels the bulls will be eying up meanwhile $1330 and $1324 are near term support.
Crude oil spread trading investors witnessed how markets can move aggressively in the opposite direction to a trend. Brent saw the profit taking bring it back below $100 and Nymex has brought back below $90.
As pressure mounts on Mubarak to step down as President of Egypt the more crude could correct downwards to levels seen before the crisis. This won’t mean however that the longer term upward trend for crude prices is over and it’ll take a far greater retracement before we can say days of $100 a barrel are over.
This morning Brent has just crept back above $100 and is at $100.10 while Nymex is lower by just 30 cents to $88.75.
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Commodities Spreads, 4 Feb 2011
The recent Dollar weakness has finally led to a move by gold spreads to test the $1350/2 area. Bernanke’s comments were also supportive of strength for the precious metal as he kept the prospect of further support for the US economy alive.
At $1350 this morning the gains have stopped at the near term resistance but a break above here could see gold test the mid $1370s. $1325 is now a decent support area.
Crude oil spread betting prices just pulled back a little yesterday as traders factored in the possibility of oil overshooting slightly in the last week. Profit taking was definitely the order of the day but Nymex remains above $90 at $90.90 this morning and Brent is at $101.70.
Commodities Spreads, 3 Feb 2011
Crude oil spreads continue to climb higher, with Brent up another 70 cents in early trade, and as long as the unrest in Egypt continues it's hard to see crude prices softening. This, in turn, could keep equity prices in check for the time being.
Gold continues to oscillate around $1330 and is 7 Dollars in the red this morning. The inability of the precious metal to get back above the $1350/2 area is a concern for the bulls but for as long as it remains above $1300 the trend is favouring them.
As mentioned, crude prices are firmer with Brent above $103 and Nymex continuing to lag behind its cousin in the mid $91 area. Prices remain inflated by the Egypt effect and with no resolution forthcoming fears of supply disruptions continue.
Commodities Spreads, 2 Feb 2011
Gold reversed earlier losses and had a go at $1340 but didn't rally as much as you'd expect considering the bashing that the Dollar received.
This morning we're at $1337 so bulls will be hoping that resistance at the recent little double top at $1347 can be taken out so we can test $1354, a past support level.
To the downside yesterday's low at $1324 and then $1318 are near term support. Over the longer term the failure to breach $1300 to the downside is giving bulls the upper hand.
Crude oil spreads continued higher as the Egypt affect continued to support prices. Brent looks very comfortable above 100 Dollars and is at $101.70 this morning. Yesterday's high at $102.00 and then $102.85 are the next targets to the upside while to the downside there isn't much support until $98.90/50.
Commodities Spreads, 1 Feb 2011
Gold fluctuated within a bit of a narrower range than experienced in the past few days and didn’t benefit in anywhere near the same way that oil did.
At $1335 this morning bulls continue to hope that $1300 will hold out and a break back above $1350 could pave the way for more gains.
The crude oil spread trading market is taking a breather following another spike higher yesterday. Traders are pricing in the possibility of escalation of protests across the Middle East so, for as long as the unrest continues, crude prices will remain well supported.
Brent finally broke through $100 and sits happily above there for now at $100.65.
Nevertheless, traders need to be aware that commodities spread betting markets can pull back just as aggressively as they rise so bulls beware.
Commodities Spreads, 31 Jan 2011
Geopolitical tensions in the Middle East are never a good thing for financial markets and last Friday we saw just how they can affect oil prices in particular.
The US crude oil spread betting market jumped from $85 to $89, at one point rallying over a Dollar in 10 minutes. This understandably brought the sellers out in equity markets so this morning we’re seeing further weakness for the FTSE, albeit slightly better than where we were calling the market to open overnight.
The unrest has been going on for days and will continue well into this week unless there is a change at the top of Egypt. For now the military haven’t got involved which has led to a swathe of lawlessness, but the fear is that if they do the death toll could be made even worse.
There’s no question that the demands of the people for regime change need to be met, but the fear that the result would be a less friendly “ally” of Israel could put further upward pressure on oil prices.
The gold spread trading market unsurprisingly bounced aggressively off lows and almost finished the week back above $1350. Still, the risk aversion this morning is also putting pressure on the price of the precious metal which is 6 Dollars softer at $1333.
Gold’s retracement has just come to a brief half but traders will be keeping an eye on $1318 and $1307 to the downside, meanwhile $1347 to the upside is resistance.
As mentioned crude was the exciting market to watch late on Friday as it spiked dramatically. Brent was just a whisker short of recording three figures, hitting a high of $99.90 overnight, and is softer this morning at $98.90. All eyes will be on events in the Middle East and this will be the determining factor for oil prices in the coming days.
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Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
'Commodities Spread Betting February 2011' by DB, updated 11-Feb-11
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