Crude Outlook – 12th Nov, 2008

U.S. crude futures settled on Tuesday below $60 a barrel for the first time since March 2007 as demand concerns due to the ailing world economy .Crude futures fell sharply even after a fresh indication from OPEC of another output cut.

China's stimulus packages also failed to hold energy prices at higher levels. China launched an economic stimulus package on Sunday worth nearly $600 billion for supporting ailing economy. This plan is for 2 years and Funds from the stimulus package will be spent in ten major areas that include low-income housing, rural infrastructure, water, electricity, transportation and improvements in the environment. And also expected it will improve the current global economic condition by improving the domestic demand.

In the last week, Crude oil fell to a 22 month low of $59.97 and ended at $61.33 a barrel as concerns about a slowing global economy curbing already slowed oil demand. The falling in oil also supported by the surprise report of a build in U.S. gasoline inventories, which indicated that demand remains weak and crude inventories were flat after five consecutive reports of builds at 0.50 mln barrels. U.S. total oil product demand in the past four weeks fell to 19.10 million barrels per day, down 6.7 percent from a year ago, the EIA reported.

Oil price had touched an all-time high of $147.27 a barrel on 11th July but has corrected from there in the succeeding weeks.

Light, sweet crude oil for November delivery in the New York Mercantile Exchange traded in the range $58.60 - $62.1, before settling at $59 a barrel yesterday.

Weekly Crude Oil (DWTI NOVE.)

Expected to trade within the range of $ 63.10 to $59, breaking of either a side makes the direction, Resistances are $65.60 $69, $71.30, Supports seen at $57.20, $53.60 and$ 49.80.

DWTI (November) traded in the range $61.10 - $58.70 and closed at $59.33

TECHNICAL OUTLOOK (Intra-day)

DGCX Crude (November) - Bullish above $59.78; bearish below $59.30


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Gold Outlook – 12th Nov, 2008

US Gold futures fell yesterday as strong dollar, as well as liquidation pressure because of a tight credit market. Deteriorating global economy and weaker equities, investors cut riskier assets also weighed on gold prices.

Weakness in crude price is another factor affected the precious metals movements. U.S. crude futures settled on Tuesday below $60 a barrel for the first time since March 2007 as demand concerns due to the ailing world economy .Crude futures fell sharply even after a fresh indication from OPEC of another output cut.

China's stimulus packages also failed to hold energy prices at higher levels. China launched an economic stimulus package on Sunday worth nearly $600 billion for supporting ailing economy. This plan is for 2 years and Funds from the stimulus package will be spent in ten major areas that include low-income housing, rural infrastructure, water, electricity, transportation and improvements in the environment. And also expected it will improve the current global economic condition by improving the domestic demand.

At the same time the U.S. Labour Department said that the unemployment rate increased from 6.1% to 6.5% in October, the highest in fourteen years. Non-farm payrolls declined 240,000 in October, a bigger loss than was expected as-200 k.

In the last week US Gold futures recovered despite steady dollar and weak oil prices. Most of the data’s released in the last week were mixed in US and resultant a range bound movements in dollar.

International spot gold traded in the range $749
- $726.10 a Troy Ounce and last quoted at $745.5.

Weekly Outlook (DG. OCT.)

Expected to trade within the range $761.80 to $727, breaking of either a side makes the direction, Resistances are $745 $762, $778, Supports seen at $717, $707 and$ 683.

Last day DGCX Gold Dec. traded in the range $746– $726.50and closed at $733.90

TECHNICAL OUTLOOK (Intra-day)

GOLD (Dec) - Bullish above $ 737.50 bearish below $ 732.50


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safe trade calls

GOLD

Continue to view, as long Resistance 11825 & 11900, down trend likely to continue. for the day sell below 11550 S/L 11585 and T/p 11500-450/sustain below towards 11300 in coming days OR sell ard 11810-820 S/L 11825 and T/p 11750-710 (any time close above 11900/12375/12850/13600/14325 bullish while close below 11450/11290-250 bearish for medium term)


SILVER

Continue to view as long Resist of 17050/17300/17550 & 17750 down trend likely to continue. book profit on sell below 16850-800, for the day sell below 16550 & more below 16490 S/L 16625 and T/p 16300 & 16100 and close below 16100 test 15400 atleast in coming days OR sell ard 17120-130 S/L 17150 and T/p 17000-16900 (any time close below 16100-15975 bearish rally while close above 17750/19000/20550/21400/ 22150/25250/26350/27475/28000 bullish for medium term)


CRUDE

Crude oil Inventory Schedule to release 2morrow. Continue to view, as long Resistance 3025/3150, down trend likely to continue. for the day sell only below 2860 & more below 2845 S/L 2885 and T/p 2800-2770 OR sell ard 2960-65 S/L 2970 and T/p 2935-2905 (now crude need to close above 3150/ 3450/3765/4120/4400/4800/5000/5290 for bullish rally while close below 2840 bearish for medium term)


COPPER

Continue to view, as long Resistance of 191 & 199, down trend likely to continue. book profit on sell below 187, for the day sell only below 180.5 S/L 181.75 and T/p 179-177/sustain below towards 165-170 in coming days OR sell ard 186.2-186.5 S/L 187 and T/p 185.5/183.5 (upside strong rally only on close above 199/215/234.5/248/270/ 305/316/327/339/351.25/360.5/387/398 while close below 180.5 bearish for medium term)


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important datas

Wednesday, 12 November 2008
all times GMT
(last release in parentheses)

0030 Australia November Westpac consumer confidence (-11.0%)
0030 Australia Q3 wage cost index (1.2% q/q)
0030 Australia Q3 wage cost index (4.2% y/y)
0100 Australia Secretary Henry speaks
0500 Japan October consumer confidence (31.4)
0930 UK October jobless claims, change (31,800)
0930 UK October claimant count rate (2.9%)
0930 UK September ILO unemployment rate (5.7%)
0930 UK September average earnings
0930 UK September unit wage cost, manufacturing
1000 Eurozone September industrial production (1.1% m/m)
1000 Eurozone September industrial production (-0.7% y/y)
1030 UK Bank of England quarterly inflation report
1200 US MBA mortgage applications
2130 NZ October performance of manufacturing index
2145 NZ September retail sales (0.4%)
2350 Japan October domestic corporate goods price index (-0.4% m/m)
2350 Japan October domestic corporate goods price index (6.8% y/y)
2350 Japan Foreign purchases of Japanese equities and bonds
2350 Japan Japanese purchases of foreign equities and bonds

Global outlook – 11th Nov, 2008

Crude continued to dwindle on persistent concerns about curbed demand in a slowing economy as global equities slumped and a stronger dollar added pressure. Crude futures tested below $59 per barrel even after a fresh indication from OPEC of another output cut if prices keep falling. One piece of negative news, such as demand destruction in International Energy Agency report being even worse than expected, or the pull from the large open interest on the $50 puts on the expiring (on Monday) December options and the bottom could fall out. Economic gloom overpowered financial markets again sending global equities and commodities lower. OPEC may cut oil output by another 1 million barrels per day when it meets next month, an OPEC source from one of the group's core members. China's October crude oil imports rose 28.2% from a year ago, fastest since July 2007 and the third-highest daily rate on record, amid a slump in oil prices.

Gold tumbled in the face of a stronger dollar, weaker crude oil and liquidation pressure because of a still-tight credit market. Gold hurt by a higher dollar as a deteriorating global economy and weaker equities cut investor risk appetite. It's difficult to sustain a gold rally until interbank lending improves and liquidation of assets, including gold reduced and dragged down by weaker crude oil that dropped below $60 per barrel on recession worries. Furthermore gold bullion sales by UBS to India increased sharply in the past two weeks, and India's local gold premium suggests demand is strong.

Copper lost more than 7% as demand worries resurfaced; pressuring prices back down to levels seen before Monday's Chinese economic stimulus plan was announced. The euphoria surrounding China's launch of a $600 billion economic stimulus package to shore up its slowing growth fades. China's 4 trillion Yuan ($586 billion) stimulus plan will only have a gradual effect on the country's base metals industry, according to the vice president of the state-controlled China Nonferrous Metals Industry Association. Negative sentiment toward global growth and commodity demand keep the bears fully in control of industrial commodity markets for the foreseeable future. Copper's bearish momentum deepens despite positive trade data from China, the world's leading metals consumer. China's imports of unwrought copper and semi-finished copper products surged to 231,212 tonnes in October, versus September's 213,782 tonnes. Fears of waning demand reflected in steady inventory builds in London Metal Exchange-registered warehouses.

Indian rupee closed at its lowest in a week as a sharp fall in the domestic equity market raised concerns of more foreigners repatriating funds, pressuring the currency lower. Importers were there in the market but most of the demand was from the FIIs. Foreign institutional investors have bought shares worth $500 million in November, but have been net sellers of $12.6 billion so far in 2008.

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Commodity prices will rise again soon

The G-20 meeting in Brazil over the weekend has unwittingly set the foundations for the devaluation of cash, rise of commodity stocks and the turn of the market worldwide.

It does not pay off any more to hoard cash in savings accounts soon paying little more than 1 to 2 per cent. Money has to be diverted to more profitable investments and, in the middle of this development, the turn of the market is in sight.

Among other recommendations, the G-20 meeting, while admiring those Governments which have already taken or going to take bold action, advises Governments to cut interest rates further and to spend. This resonates with President-Elect Obama's plans and his ambitious infrastructure reconstruction programme and China's weekend announcement of a nearly $600 billion investment project for rebuilding houses destroyed in the summer earthquake and still more infrastructure projects: railroads, airports, subways and bridges.

Though in doing so China may wish to benefit from current relatively lower commodity prices, such projects will inevitably lead to revaluation of commodities.

The recent decline of commodities is going to be a short-term story as the same recession that caused the fear of declining construction and reduced use of steel and copper is going to increase the use of these metals.

This could be to colossal proportions through policy developments as more Governments in advanced economies as well as emerging ones start borrowing at low interest rates for a number of projects including re-building railways, roads, bridges and airports in order to keep their populations employed.


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