Crude Falls as Dean Heads South of the Border
Energy futures tumbled as Hurricane Dean chugged toward the Mexican coast as a downgraded Category 2 storm, with the most-active October Crude Oil contract falling to lows not seen since late June. The weakening of Dean along its more southerly track suggests minimal impact on Oil production in the Bay of Campeche. Long liquidating selling was especially evident in Crude Oil futures, with today’s expiration of the September contract adding to the severity of the sell-off. Large speculators are not looking to take delivery of Crude, especially with deferred contracts in a backwardation to the lead month contract. October Crude fell through both the 100-day moving average and the psychologically important $70 per barrel level, sparking a double-whammy of sell-stops below two key support points. Traders will now turn their focus to tomorrow’s EIA energy stocks report, with estimates that Oil stocks fell between 2.5 and 3 million barrels last week. $68.50 is seen as the next support point for October Crude, with resistance found at $71.55. October Crude Oil closed at $69.57, down $1.39.
Strong demand for U.S. Wheat continues, with Egypt announcing a 450,000 ton purchase of U.S. and Russian wheat. 240,000 tons of the tender was said to be for U.S. Soft Red Winter Wheat, which sent December Chicago Wheat futures once again above the $7 per bushel level for the first time since last week’s commodity-wide sell-off took it as low as $6.70 ½. Today’s sales combined with yesterday’s higher-than-expected weekly export inspections continue to demonstrate the strong demand for Wheat, despite near-record prices. The next resistance point for December Wheat is seen at the contract highs of $7.19, with support found at the 20-day moving average, currently at $6.79 ¾. December Wheat closed at $7.04, up 13 cents.
