OPEC Indecision
Crude Oil – Crude futures are slightly lower this morning, with traders reluctant to make a move before the December 5th OPEC meeting. There is a great deal of indecision among analysts on what the next move by the cartel will be due to conflicting statements and infighting. Yesterday's drop in the USD contributed to a late rally after trading lower for much of the day. Today figures to be another choppy, indecisive trading session ahead of the OPEC meeting and next week's FOMC policy statement. January Crude managed to hold above the 50-day, after flirting with the moving average in early trading. The 9 and 18-day averages did cross over to the downside, which can be seen as bearish in the intermediate term. Momentum is showing some bullish divergence from the RSI, which suggests a slight upward bias in the near-term. Support comes in at 87.85 and 85.00, while resistance can be found at 90.00 and 93.05.
Bonds – Bond futures continue to trend higher on continued financial worries. There are worries that the Bank of Scotland may be the newest victim of the recent credit trap. Also, there are concerns that consumers with good credit may be impacted by the subprime crisis. The recent move higher, despite a rebound in the stock market, suggests that fixed income traders are betting on a rate cut next week and not next month from the Fed. Yields are currently at the lowest levels in over 3 years. March Bonds seem to be breaking out of recent congestion in the early going today, and the next major test for the market may be the 109-00 mark. Momentum is showing bullish divergence from the RSI, suggesting bullishness in the near-term. Support comes in at 117-25 and 117-00, while resistance can be found at 118-30 and 119-14.
Wheat – March Wheat edged lower for the second consecutive day in a very choppy trading session. The bullish news that Argentina and Russian may have tight export supplies and the poor growing weather across the southern plains in the US was tempered by lackluster export data, which may be attributed to the slight rebound in the USD. New crop futures finished lower for the first time in a week, and spreads between old crop and new crop may widen as farmers try to capitalize on higher grain prices. The International Grain Council projected that the 2008-2009 Wheat stocks will rise after three consecutive years of output lagging behind demand. March Wheat (old crop) rejected advances above the $9 mark last week. This could be a bearish signal for the market, although March futures seem to have found solid support in the 860 area. The market is currently overbought, after making a solid run since mid-November, which suggests a negative to sideways bias for the market. Support comes in at 860 and 825, while resistance can be found at 900 and 950.
Rob Kurzatkowski, Commodity Analyst
