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While fund managers continue to wax bullishly, the market continues to move in the opposite direction. As of a week ago non-commercial net length in the NYMEX Henry Hub futures stood at near a three-and-a-half year, while open interest hit a new all-time peak for the twentieth time in the last twenty-six weeks. Nevertheless, this market has closed lower in seven of the first ten sessions of August. The front-month contract for Sep’06 delivery has lost onesixth of its dollar value or $12,980 per contract as a result.
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According to Friday’s CFTC numbers, the Large Specs are holding their longest position, 70,530 contracts, since the all-time peak was set on May 02nd. What’s more, open interest hit a new record for a second straight week, up 55,111 contracts or 5% to 1.16 million. So be careful, even though the bears are basking in the afterglow of the Mideast "cease-fire" and the news from Prudhoe Bay, the Large Specs still own – both figuratively and literally – this market.
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West African suezmax tonnage, along with other classes’ saw a large pop last week from the news out of Prudhoe Bay on speculation the longer voyages to the USWC will siphon a significant amount of tonnage from other markets. For instance, WA/USGC, which had been holding steady at/near ws 150, jumped 50 points last week. Per the latest EIA numbers imports for crude oil, finished products and blendstocks continue to surge, thus lending further support to freight markets. Add to this mix the looming Atlantic Basin hurricane season, and the recipe is set for continued strength lasting into the fall. Third and four-month deferred IMAREX VLCC forward freight agreements are trading between ws 207 and 208. |  | | Commentary Reserved for Subscribers |  | | Commentary Reserved for Subscribers |  |  |
NAT-GAS… Despite some initial weakness last week, gas bulls posted another strong showing. As far as this week is concerned bids above last weeks 7.375 pivot area high, 7.375 alerts to further bullish trade and an attempt to cross the 30-day pivot moving average, 7.631. A close above here sets the table for further strength towards the Katrina/Ivan extensions from 8.041 to 8.243. Alternatively, Failure to hold the 14-week pivot moving average, 6.854 and last week’s 6.810 low should find a path towards the 50% retracement, 6.744. Offers below this critical point of reference can then take focus on the weekly pivot area from June 23rd between 6.570 and 6.480.
CRUDE OIL… NYMEX WTI closed lower again last Friday for the third time in the last four weeks. Nevertheless, this market continues to track higher along a weekly trendline from March 24th. As far as this week goes… violation of the trend at 73.86, alerts to further weakness into the next ratchet of support in between the June 21st/26th pivot areas from 72.54 to 70.50. Further selling below the $70 critical point of reference signals to a potential flush towards longterm support from 65.87 to 65.05. Alternatively, penetration of the 30-week pivot moving average, 75.51 will then give bulls a chance to close the August 07th/10th gap from 75.60 to 76.05. Further bids above here cautions to fresh bullish momentum towards the all-time spot peak, 77.95 and the 79.45 life-of-contract high. | |  | 
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