Crude Capitulation Bottom?
After yesterday’s USDA Grain report there is nothing to report here. Do not mind that man behind the curtain there is nothing to see here. The numbers were very disputable but as a trader and devil’s advocate on crude oil prices we will eventually come back to reality and the Free Markets will wake up as well.
In the overnight electronic session the July corn is currently trading at 373 ¼ which is a ½ of a cent lower. The trading range has been 373 ¾ to 372 ½. Keep in mind the May Grain contracts expire tomorrow and even if there is no passion look out for the squeeze play which is nowhere in sight.
On the ethanol front there were no trades posted in the overnight electronic session. The June contract settled at 1.461 and is not showing the numbers of bids at 1.449 and is showing 5 offers at 1.458. The Open Interest is at 1.454 contracts.
On the crude oil front the technicals and fundamentals are showing a capitulation bottom. Just look at the charts technically and look fundamentally that OPEC is ready for even more production cuts at these price levels. U.S. oil companies or as the politicians call them Big Oil because making profits more than a politician in Washington D.C. is unthinkable.
Oil companies that have backed away from capital spending projects that have put their gross profits into exploration and research which has let us know what we did not know existed five years ago bet with gross profits you also have repulsive losses. And that my friends are the oil industry. Unfortunately, the majors cannot afford to take these huge losses so they will not commit to the capital projects that cost them billions in profits and we stay in the Shale patch which is cheaper and not a threat to walk away from.
In the overnight electronic session the June Crude Oil is currently trading at 4798 which is 65 points higher. The trading range has been 4816 to 4734. I expect higher trade even though we are pushing new resistance at these levels. This market is way oversold.
On the Natural Gas front the crazy weather that has put pressure on the electricity market and grid and the cheap prices without the help of coal plants to pick up the slack to stabilize prices, like the Grains investors will walk in one day and the Free Markets will wake you up and we will smell the coffee. Today we will have the weekly EIA Gas Storage data. And Scott Disavino from Thomson Reuters weekly poll of 23 analyst participating are expecting builds in the injection number anywhere from 49 billion cubic feet (bcf) to 65 bcf with themedium at 53 bcf which compares to builds of 67 bcf last week, 58 bcf a year ago and the five year average of 73 bcf. In the overnight electronic session the June Natural Gas is currently trading at 3.330 which is .038 cents higher. The trading range has been 3.336 to 3.273.