Something strange has been occurring here in the Midwest over the last week or two. Strange colors in the sky along with bright light seemed to be an everyday occurrence. Upon further investigation my research told me that this may be a sign of Spring, arriving a bit later than usual but welcome none the less. The extended winter had me wondering if we would ever see it again, but it has arrived just in time to segue into summer.
As approach summer I think of all things that bring a Midwesterner suffering from Cabin Fever joy. Grilling out, summer festivals, trips to a lake or beach, or catching a concert or two are usually on my summer schedule. It also makes me think of what it is going to cost to get to all these events, especially if there is a long drive involved.
Commercial Crude Oil Stocks
The weekly Energy Information Administration inventories report was released on Wednesday. It showed that we had a drop in commercial crude stockpiles by 3.431 million barrels. Inventory at Cushing, OK (the largest U.S. storage hub) also saw a drop of 300,000 barrels, while the hubs at the Gulf coast lost nearly 6 million barrels, after posting a gain of nearly 3 million barrels the prior week.
Crude Oil Call Spread
We haven’t seen any signs of domestic demand for crude oil declining. Things aren’t great with the economy but Americans are spending a little more than they have over recent years. As we approach “driving season” I am always looking for crude to move higher. Right now I like buying the August Crude 102-104 call spread at 68 points ($650.00) or better. The options expire on July 17; I am looking for this trade to peak about a week prior to that, setting a target exit at 150 points. Risk is limited to the cost of entry plus fees and commissions.
Thursday Webinar
For those interested Walsh Trading is holding our weekly grain webinar series today Thursday June 5, at 3pm central time hosted by our Senior Grain analyst Tim Hannagan. Tim has been ranked #1 by Reuters and Bloomberg in 2011 and 2012 for his most accurate end of year price predictions for soybeans and corn. Registration is free and if you cannot attend live, a recording will be sent to your email upon signup.
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.
