Crude Bull Market is “Well Oiled”
November Crude Oil futures surged to contract highs this afternoon, rising by over $2 per barrel as a weaker U.S Dollar and solid near-term demand has Oil bulls flexing their muscles. The continued drawdown of oil inventories in Cushing, Oklahoma – the delivery point for the NYMEX Oil contract – to 21-month lows is supporting near-term futures prices. The weaker U.S. Dollar is sparking inflation fears and benefiting commodity prices, including those in Crude Oil. Oil futures also found support from a surging Heating Oil market, with traders fearing that below-average refinery rates will prevent an adequate buildup of Heating Oil supplies as the winter season approaches. The next resistance point for November Crude is seen at the all-time highs of $83.90, with support found at the 20-day moving average, currently at $78.11. November Crude Oil closed at $82.89, up $2.59.
Cotton futures climbed to 2½-month highs this afternoon, as speculative buyers added to existing long positions. The sharp rally in the grain complex and a general rise in commodity prices due to a weak U.S. Dollar were also seen as supportive for Cotton futures. December Cotton traded as high as 6750 before a late session profit-taking selling spree caused prices to close well below the day’s highs. The battle for acreage next season is keeping the December 2008 Cotton contract active, with new contract highs being made at 7550. Cotton must compete with Wheat, Corn, and Soybeans for production on flexible acreage. The next resistance point for December Cotton is seen at 6800, with support found at the recent lows of 6430. December Cotton closed at 6662, up 67.
Mike Zarembski, Senior Commodity Analyst
