Commodities Spread Trading August 2009
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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 Spread Betting, 14 Aug 2009
According to David Evans over at BetOnMarkets, "Crude oil is trading higher as optimism that the global economy is recovering from a recession bolstered hopes of a rebound in fuel demand".
Price Update:
- Gold closed yesterday at $956.50
- Brent Crude Oil (Sep) closed yesterday at $73.48
- WTI Nymex / US Oil (Sep) closed yesterday at $70.52
Commodities Spread Betting, 13 Aug 2009
Gold closed yesterday at $948.25.
Oil, having rejected the $75/$76 level a few days ago is now having another pop to the up side at $74.60 (October Brent) with traders once again getting their squeezing boots on.
It is difficult to trade oil at the best of times but with the speculation over global growth becoming the major driver for rallies and pull backs the actual inventory and supply information seems to be taking a back foot.
The underlying facts are that:
- There is ample black stuff swirling around - as is shown by the $2 difference between the September Nymex delivery and the October settlement.
- Expectations are still high that demand will increase through Q4 2009 and into 2010. This is causing heavy hedging in forward contracts from big energy consumers.
Commodities Spread Betting, 12 Aug 2009
Gold closed yesterday at $943.75.
The big mover yesterday was Crude Oil as the markets rejected the $75 level with a vengeance and this morning we are following through to the downside.
Nymex is now under $70 for the front delivery month. Note there is a sizeable $2 difference between the September and October deliveries. The equity and oil markets appear to be inextricably linked at the moment as good news for one is considered good news for the other and vice versa.
With traders trying to get a hold on overall values we may well see quite a bit of directionless trading over the next few months.
Commodities Spread Betting, 11 Aug 2009
In the Oil market, traders are getting a strong grip on the Brent/Nymex spread. Since my comment last week when it widened to 350 cents it has now narrowed to 280 with the momentum definitely in favour of the US crude.
The inventory numbers due tomorrow will be keenly watched as traders try to evaluate not just onshore stock but the level of crude held in tankers offshore. The same could be said for the UK where even I was surprised to see numbers of tankers laid up off the south coast. Not exactly adding to my appreciation of the view!
The 75 buck level remains a good barrier to a move higher but if a break does occur there will probably be some solid buying as companies look to head off a possible big rise in energy costs with increased hedging.
Gold had a poor day yesterday as other asset classes rallied and global problems seemed to take an ever more remote stance. As a hedge against perceived possible disasters the yellow metal has held up surprisingly well in the face of improving perceptions and waning inflation fears.
Obviously not everyone has such a rose tinted view of the current economic situation. The price has been oscillating around the mid 900’s for months now with an occasional attempt to the up and down side to relieve the boredom.
As mentioned yesterday, Gold was just above good support at 951-953 when this broke we had a swift sell off down to 942 but no follow through after this. The real test will come if there is an attempt on the rising trendline from last October (currently at around 935).
Commodities Spread Betting, 10 Aug 2009
On the Commodities spread betting front the run up in Oil and Gold hit something of a brick wall in the last couple of days last week as the $75 plus level in Brent brought out the sellers in droves.
The $75 target has been beloved of OPEC for so long now that we might have forgotten that it was there.
With all the talk of renewed world wide growth the black stuff a gained confidence with each passing week. After Goldman’s first mentioned $200 and then talked of $25 (slight variation there chaps) the credentials of the top Oil analysts have taken something of a battering.
It might be more pertinent to check your bunions, look out for birds flying backwards or watch for cows lying down in fields if you want to get a real feel as to the next move in current conditions.
For Sept Brent Oil it must be noted that the $72.30 level is looking attractive as the top of the previous move higher. It would make a nice symmetry if we could at least confirm the break out with a failed attempt to get back into the previous trading range.
Gold continues to battle around in the $900’s with rallies and falls taking place with monotonous regularity.
The current price at $955 is just above good support at $951-$953 but the real defining trend remains the upward trend line from October last year. This has provided support several times to date and is currently quite some way lower at $934 (or thereabouts).
This support is likely to be the defining battle for the future as the support gently moves higher against a market trading in a contained range.
Price Update:
- Brent Crude Oil (Sep) closed last week up $1.89 at $73.59 (up 2.64% week-on-week)
- WTI Nymex / US Oil (Sep) closed last week up $1.48 at $70.93 (up 2.13% week-on-week)
- Gold closed last week up $24.20 at $958.50 (up 2.59% week-on-week)
Also see:
Financial Spreads » "With FinancialSpreads.com you get all the normal
advantages of Spread Betting plus..." » read Financial Spreads review.
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Commodities Spread Betting, 7 Aug 2009
Gold closed yesterday at $965.00.
Brent is suffering the same fate as equities as we are back below $75 and traders wait for the big figure of the day at 13h30.
Commodities Spread Betting, 6 Aug 2009
Amidst all the joy around the equity markets the continued strength of Gold is rather worrying.
The allure of precious metals is normally only evidenced when investors are worrying about something else but with ‘green shoots’ apparently there for all to see buyers are still keen on acquiring the confidence of Gold.
One does worry that either we have a bull run in Equities or Gold, not both. At the moment the fear is that investors are trying to have their cake and eat it.
According to David Evans over at BetOnMarkets, "Crude oil is trading around the $71 after stockpiles in the US, the largest oil consuming nation, increased. Although refiners have reduced processing.
An Energy Department report released yesterday showed a bigger-than-estimated gain in crude stockpiles, pushing them to a five-week high. Oil prices could stay around the current level until Friday when the Non Farm Payroll numbers are released.
Crude oil is up fifth straight day on speculation that fuel demand will increase as gains in equity markets spurred optimism the global recession is ending.
"Oil prices could test the $66 mark by the end of the week".
Commodities Spread Betting, 5 Aug 2009
Gold closed yesterday at $964.00.
Oil traders are trying to play the Brent/Nymex (UK Crude/US Crude) spread but this is proving to be a tad difficult as the spread continues to widen.
Normally Brent trades slightly below the US product, about a $1 lower. In recent times this has become much less stable as US supply has remained high in comparison to Brent. This has resulted in the current $3 premium for Brent over US Nymex.
Unfortunately for many punters the temptation to oppose this widening in the spread has been a tad expensive with the September contract widening from pretty much flat in Mid July to the aforementioned 300¢ current difference. We are now just shy of the $75 per barrel target desired by OPEC, at least in Brent. This may well form something of a cap as producers look to lock in value.
Commodities Spread Betting, 4 Aug 2009
Gold closed yesterday at $954.90.
Crude Oil seems to be failing just shy of the $74 level again and Brent looks to be particularly fragile at this moment in time.
The price is 85¢ off in early action at around $72.75. With the dollar having a bit (only a bit mind you) of a better session there may be some liquidation of long positions as traders ponder the chances of $75 being reached in the current bull run.
Commodities Spread Betting, 3 Aug 2009
As you will all have read the commodity boom continues to wind its way through the markets with copper leading the way.
The rumour that the Chinese are cornering much of the production will not go away but, in reality this seems a tad unlikely. Futures contracts have an annoying habit of ‘expiring’ forcing buyers to either take delivery or roll to the next contract.
If there is no real underlying requirement for the product then massive buying for future requirements can come to a very sticky end indeed. Several Chinese banks discovered that last year with huge commodity induced losses.
If growth continues to be weak, and consumer confidence is slipping once again, there is a good chance that the current spike in metals is just that, a spike.
Punters would be advised to play the commodities very carefully indeed as the current shifts in prices from Oil to Gold and on to Copper are getting very dramatic.
Crude Oil continues to rally up towards the recent highs with $72.80 in Brent looking to be a solid barrier.
The 10 day rally in prices through the middle to late July mirrored the rise in the equity markets as dealers quite naturally assumed that appreciating expectations for the economy should equate with a rising demand for the black stuff. Coupled with OPEC’s repeated desire for prices to be above $75 this has made for pretty much one way traffic.
On the other hand it must be remembered that we are talking about Oil demand now or at least in the very near future. The equity markets are trying to look rather further forward. The way looks to be up at the moment but bulls should be wary or disappointment and be quick to reverse if weakness returns.
Price Update:
- Brent Crude Oil (Sep) closed last week up $3.65 at $71.70 (up 5.36% week-on-week)
- WTI Nymex / US Oil (Sep) closed last week down -$0.87 at $69.45 (down -1.24% week-on-week)
- Gold closed last week down -$13.85 at $934.30 (down -1.46% week-on-week)
Also see:
Financial Spreads » "With FinancialSpreads.com you get all the normal
advantages of Spread Betting plus..." » read Financial Spreads review.
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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 Trading August 2009' by DB, updated 14-Aug-09
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