Oil’s well that ends well!
Crude Oil futures rose sharply this morning, as the Energy Information Administration reported that Oil inventories fell more than expected last week. In this morning’s report, the EIA announced that Crude Oil inventories fell by 3.5 million barrels last week. This came as a surprise to many traders who were looking for a more modest decline of between 600,000 and 1 million barrels. This news sparked a sharp rally for Crude futures, with the most active October contract trading above the $73 level for the first time in nearly 2 weeks. Adding to fuel to Oil surge, was the sharp drop in Gasoline inventories, which fell by 3.6 million barrels vs. pre-report estimates of a 1.8 million barrel decline. Traders also report support coming into the Energy sector from higher stock index futures, especially after yesterday’s 30-plus point drop in the S&P 500 futures sparked fears of slowdown in the U.S. economy, which would be a negative for Oil prices. The next resistance point for October Crude is seen at $74.00, with support found at $70.00. October Crude Oil closed at $73.51, up $1.78.
Cocoa futures climbed this morning, posting highs not seen since August 17th, as higher Cocoa prices in London, a weaker U.S. Dollar vs. the British Pound, and a rally in stock index futures supported Cocoa prices in New York. Moderate buy stops were uncovered once December moved above the recent highs of $1816 sending prices as high as 1823, before origin selling came in and capped the day’s rally. Concerns about black pod disease in the West African growing regions were also seen as a supportive factor, which if widespread, could hurt production. The next resistance point for December Cocoa is seen at the 20-day moving average near $1834, with strong support found at the recent lows of $1750. December Cocoa closed at $1806, up $36.
Mike Zarembski Senior Futures Analyst
