The late summer weather is a major variable in the natural gas market as North America heats up and more electricity is generated by natural gas to power the air conditioners. This year seems to be making up for lost time since El Nino played its predicted part in a long cool, spring. The National Oceanic and Atmospheric Administration (NOAA)… Read more →
According to the weekly Commitment of Traders (COT) report issued by the Commodity Futures Trading Commission (CFTC), crude oil drillers have sold the most forward production since oil was trading at more than $100 per barrel. Considering that drillers are willing to sell just as much at half the price and that the recent rally to $50 per barrel has… Read more →
The Chinese government repeatedly attempts to micro-manage the lives of its citizens. The effects of which continue to be unintended consequences both socially and economically. This week, we’ll discuss the citizens’ pool of money that the government continues to hold hostage and the mechanisms the Chinese government has employed thus far that have created a predictable ripple effect, visible to… Read more →
Crude oil touches nearly every part of our lives throughout the day. The more we do, the more we use. This is what makes crude oil such a valuable economic forecasting tool. This week, we’ll look at the big picture in crude oil using technical, fundamental and spread data to explain what the market is telling us as we head… Read more →
Our Commitments of Traders research is based on trading reversals. Today, we’ll look at the weekly unleaded gasoline chart as commercial traders force its turn lower inline with its standard seasonal peak. This is nearly an identical situation to last year. While last year’s rally held out a couple of weeks longer, it’s skid lower lasted through the rest of… Read more →
Has the commodity rally that began just before the New Year ran its course? We posed the argument in early January that the technical breakout in interest rates would point towards the general economic activity of 2016. The interest rate breakout higher, towards lower rates would ultimately show itself in the form of deflation, which would in turn, weaken the… Read more →
The heating oil market has developed a textbook pattern for trend following continuation lower. This week, we’ll look at how these long-term, macro-economic trends play out through the eyes of the commercial traders in the Commodity Futures Trading Commission’s weekly Commitment of Traders report. We’re going to examine the cycles of accumulation and distribution among the market’s participants as well… Read more →
Every market has built in fear premium. This shows up empirically through the skew of an option chain. The idea is that two strike prices with the same expiration date that are an equal distance away from the market’s current price should have the same value, everything else being equal. We can also measure this through common sense. The skew… Read more →
The sugar market has been one of the few bright spots in the commodity futures. Since most commodity exposure is long only and this market has rallied between 45%-50% since bottoming in late August it has become a commodity darling. There are three primary reasons for the recent rally. Of these, only one is structural. We feel the transitory nature… Read more →
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