Crude Oil Fluctuates With Equities, Gold Volatility Continues To Fall

Commodities - Energy

Crude Oil Fluctuates With Equities

Crude Oil (WTI)        $76.63       +$0.01        +0.01%

Commentary: Crude is close to unchanged after falling for the second day in a row on Thursday. That said, prices are only down about $1.50 from the $78.15 high put in on Wednesday. It looks as if crude oil has reestablished a tight coupling with equity markets after outperforming equities for a period. Movements this week have been influenced heavily by the release of U.S. corporate earnings, which have generally been supportive of risk assets. Look for this pattern to continue on Friday.

The International Energy Agency (IEA) released its forecast for 2011 world oil demand. It expects demand to rise 1.3mmbbl/d, or 1.6% year-over-year, less than the 2010 growth rate of 1.8mmbbl/d, or 2.1%. Non-OPEC supply is expected to rise 0.4mmbbl/d in 2011, down from 0.8mmbbl/d growth in 2010. The agency sees a relatively balanced market in the near-term.

Our petroleum inventory, supply, and demand charts now include data for the week ending July 9, 2010.

Technical Outlook: Little has changed, as crude oil remains in a very shallow uptrend, with prices attempting to climb toward the recent highs at $79.38. Beyond that is the channel top near $80.83. On the downside, $74.25 and $73.00, the channel bottom, provide support.


                                                                                                                                                                                                    

Commodities - Metals

Gold Volatility Continues to Fall

Gold      $1209.05       +$0.80        +0.07%

Commentary: Gold ended flat on Thursday, after attempting to break $1215 resistance. Prices got as high as $1217, but sellers came out and knocked the metal back down. Expected volatility continues to decline, as the CBOE gold volatility index hit the lowest levels since April, which is also the lowest level in the three-year history of the index.

Technical Outlook: The technical outlook is simple for gold: resistance at $1215, support at $1185. Traders can play the break of either level with tight stops.

Silver      $18.32        -$0.02       +0.11%

Commentary: Silver down two pennies after registering a 0.16% gain on Thursday. Like gold, silver volatility is plummeting. The metal has been trapped between $17.50 and $19.00 since April. Look for silver to take its cues from gold with some additional volatility as the gold/silver ratio fluctuates between 60 and 70.

Technical Outlook: $17.50, the bottom of the range, is key support that extends back to April. On the upside, $19.00 is resistance and the top of said range.

                                                                                                                                                                                                        

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