RBOB Gasoline – Energy futures are slightly lower this morning on yet another rejection of the century mark in Crude Oil. Gasoline prices jumped due to a flurry of bullish news: the Alon refinery explosion, expectations that OPEC will trim production, continuing uncertainty over the Venezuelan supply and broadly higher commodity prices, which suggest a highly inflationary environment. Falah Alamri – the chairman of OPEC's Board of Governors, who is also head of Iraq's State Oil Marketing Organization – stated that it is too early for the cartel to discuss cuts in output and indicated that the petroleum organization will meet in Vienna to discuss administrative issues. This dovish statement tempers some of the more hawkish statements of late from member states, but may be taken with a grain of salt, given the Iraqi government's ties to the U.S. The fire at the Alon facility, which refines 70,000 barrels of Oil daily, may be much more significant news for consumers. The refinery is expected to be offline for two months, which may overlap with scheduled maintenance at other refineries, squeezing supplies of motor fuel. April RBOB broke out to new highs on the daily chart, signaling a possible technical breakout. Prices have moved back from the 2.7223 breakout point in the early going due to technically overbought levels. Momentum continues to outpace the RSI indicator, suggesting a positive near-term bias. Support comes in at 2.6579, 2.5821 and 2.5387, while resistance can be found at 2.7771, 2.8205 and 2.8963.
S&P – Stock index futures are lower this morning ahead of consumer price data. Stocks fell into the red yesterday after spending much of the day positive in reaction to rising energy costs and worries in the telecommunications sector. Today's early release of MBA mortgage data suggests that the housing and mortgage markets are continuing to spiral out of control. The overall MBA market index fell 22.6 percent, while the purchase and refinancing indexes fell 11.5 percent and 27.9 percent, respectively. This could be an indication that consumers are expecting more rate cuts from the Fed in upcoming meetings and may be holding off on new purchases and refinancing options as a result. Today's CPI report is expected to show an overall reading of 0.3 percent and a core reading of 0.2 percent. Higher-than-expected price readings would put downward pressure on the market, possibly forcing the Fed to stall further rate cuts. Housing starts and building permits are expected to come in at 1,015,000 and 1,040.000, respectively, indicating further weakness in housing. The report that most traders will be looking forward to is the FOMC minutes released later this afternoon, which will give investors the chance to go through the thought process of the Fed at that January 30th meeting, and will give more insight into what economic data the central bank will use in future meetings to set interest rate policy. The March e-mini S&P is trapped in a triangle/wedge formation on the daily chart and is close to breaking through the lower boundary, which would indicate further declines. Tempering this grim view, the momentum indicator is outpacing both price and RSI, suggesting a positive near-term bias. Support comes in at 1344.00, 1332.25 and 1319.50, while resistance can be found at 1368.50, 1381.50 and 1393.00.
Platinum – Platinum futures have shed almost 80 dollars in early trading on heavy profit-taking and worries that all-time record prices may trim demand. Jewelry demand for the noble metal is expected to plummet in the neighborhood of 30-40 percent not only because of high prices, but indications that economies worldwide are slowing – jewelers account for roughly a quarter of all platinum demand. More importantly, auto manufacturers – which account for just under two-thirds of global demand – have begun substituting Palladium for use in catalytic converters. The supply squeeze may spurn innovation in the industry, as manufacturers look for Platinum and Palladium substitutes. Much of the selling pressure can be attributed to profit-taking due to technically overbought levels. The RSI and stochastic indicators had readings in the mid-to-high 90's, which threw up red flags for traders. If the April contract is not able to recover, traders may view the chart setup similar to a key reversal. While not a true textbook key reversal, the pattern can be viewed as very bearish and hints toward a trend reversal, at least in the near term. Support comes in at 2081.50, 2009.80 and 1963.60, while resistance can be found at 2199.30, 2245.60 and 2317.20.
Rob Kurzatkowski, Commodity Analyst