Bulls out of Gas?
The energy complex fell sharply this afternoon, with Crude Oil dropping over $3 per barrel to send prices below $72 by the close of the day session and RBOB Gasoline breaking through the $2 floor, as concerns persisted that the U.S. economy will slow due to fallout from the subprime loan situation. The most recent Commitment of Traders report had large speculators heavily long the Crude Oil market as of July 31st, and much of the recent sell-off may be tied to long liquidation by these large traders. Today's declines also took the September Oil contract below the widely watched 20-day moving average near the $75 area, which sparked some short-term momentum selling. Sell-stops were seen being triggered below the recent lows at $73.10 and again at $72.50. The next support point for September Crude Oil is the 50-day moving average currently at $71.38, with resistance found at $73.10. September Crude Oil closed at $72.03, down $3.45.
Soybean futures fell sharply to start the week, as better-than-expected rainfall in the western part of the Midwest had traders in a selling mood. Ample moisture is necessary for the Soybean crop, especially during the key August pod-setting stage. Bean prices were also put on the defensive by private forecasters looking for higher-than-average yields than previous USDA forecasts. All eyes will be on Friday's USDA Crop Production and Supply/Demand report, which will be the first to be based on actual survey estimates. The most recent Commitment of Traders report shows large speculators holding a net-long position of just over 99,000 contracts as of July 31st – down over 11,000 contracts from the previous report – as a flight to liquidity caused funds to close out positions in many commodities, including Soybeans. USDA weekly export inspections came in at 10.489 million bushels for the week ending August 2nd, up from 9.131 million bushels the previous week and near the high end of analysts’ expectations. Minor support is seen at the recent lows of $8.33 1/4, with major support found at the 100-day moving average at $8.29 1/4. Resistance is seen just above the 50-day moving average at $8.67. November Soybeans closed $8.50, down 11 cents a bushel.
