Cannon Trading Futures Blog: Daily Support and Resistance Levels

DJ OIL FUTURES: Crude Up; Tensions Over Iran Up Risk Premium(DJ)
  By David Elliott
  Of DOW JONES NEWSWIRES
 
  LONDON (Dow Jones)--Crude oil futures were trading higher
Wednesday morning in London as the market factored in further risk
premium on continued tensions between Iran and both the U.K. and
U.S.
  Traders said conditions remained jittery after prices spiked
around 8% late Tuesday on unconfirmed speculation, later denied by
the U.S. government, that Iran had attacked a U.S. vessel in the
Persian Gulf.
  Most of the gains have since been pared but a continued stalemate
over the 15 U.K. sailors detained by Iran, along with further
strength for the gasoline market, is expected to push prices
higher again.
  At 1111 GMT, the front-month May Brent contract on London's ICE
futures exchange was up $1.21 at $65.82 a barrel.
  The front-month May contract on the New York Mercantile Exchange
was trading $1.28 higher at $64.20 a barrel.
  ICE's gasoil contract for April delivery was up $15.50 at $570.25
a metric ton, while Nymex RBOB gasoline for April delivery was up
185 points at 209.15 cents a gallon.
  Concern military action against Iran could interrupt the supply of
crude oil from the Persian Gulf remains the main focus of the market
and, although Tuesday's speculation proved unfounded, the sharp
price reaction has forced traders to take a more cautious
approach.
  Up until then most market participants felt the release of the 15
U.K. naval personnel seized by Iran in the Persian Gulf would be
resolved through diplomatic means but the growing concentration of
naval vessels from the U.S. and other western regions in the Persian
Gulf has put the market on edge.
  Frederick Lasserre, an analyst at SG Securities in Paris, said the
market's sharp reaction shows the potential for military action
hadn't been factored into prices at the $62 a barrel level.
  As a result, he sees the market adopting a further risk premium of
$2 to $3 a barrel even if Iran releases the sailors, as tension over
Iran's disputed uranium enrichment program continues.
  The U.K. government reiterated Wednesday that the sailors were
within Iraqi waters when they were detained, while Iran maintains
they were within Iranian waters and it was justified in its
actions.
  But amid the political tension, there are suggestions a risk
premium is unjustified.
  "People are saying there is a worry over an interruption to supply
but we went through two Gulf wars when oil supply wasn't badly
affected," said a London-based broker. "Iran isn't going to want
to risk the flow of its main export."
  Further bolstering underlying support for the crude oil market is
gasoline.
  Strong gains in this market have dragged crude prices higher over
the last few weeks and show little sign of slowing their upward
trajectory amid extended refinery closures.
  This has been exacerbated by a strike by port workers in
Marseille, France, which has forced Total, Esso and Ineos to
reduce crude runs in their southern France refineries.
  And another expected slide in U.S. gasoline stocks in the weekly
Department of Energy inventory report, due 1430 GMT, would add
further support for gasoline prices.
  Analysts surveyed by Dow Jones Newswires expect gasoline stocks to
fall by 1.8 million barrels, distillates by 800,000 barrels crude
stocks are seen rising by 1.1 million barrels.
  These bullish factors have prompted analysts at Lehman Brothers
predict the current upward trend for oil prices continues in the
coming months as focus shifts to the U.S. driving season.
  They attribute the 24% rally in prices since mid-January to robust
demand, continued supply pressure from OPEC and recent geopolitical
events associated with Iran.
  "We believe these factors put further pressure on an already tight
oil market," they said.
 
  -By David Elliott, Dow Jones Newswires;

Sincerely, Ilan Levy-Mayer, M.B.A Vice President Cannon Trading Co Inc. http://www.cannontrading.com http://www.E-Futures.com ilan@cannoncapital.com Yahoo IM ilanlevy1970 310-859-9572 800-454-9572 Fax 310-859-0547 9301 Wilshire Blvd. Suite #614 Beverly Hills, Ca 90210 The finest compliment I can receive is a referral from a trusted client. * Important Please Note: Trading commodity futures and options involves substantial risk of loss. The recommendations contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

      DJ Fed Leaves Rates At 5.25%; Softens Tightening Bias(DJ)

  By Brian Blackstone and Campion Walsh
  Of DOW JONES NEWSWIRES
  WASHINGTON (Dow Jones)--The Federal Reserve on Wednesday held
interest rates steady and backpedaled from prior upbeat comments
on growth and inflation by acknowledging signs of a worsening
economy, and higher price pressures.
  The Fed also softened its tightening bias by referring to "future
policy adjustments" without specifying rate hikes as it did in the
past.
  That reflects a tougher environment with fewer policy options for
officials than a few weeks ago, when both growth and inflation
risks appeared to be on the decline. The end result, however,
appears the same: no near-term change in interest rates.
  The Federal Open Market Committee, as universally expected, voted
unanimously to keep the federal funds rate at 5.25% for a
sixth-straight meeting dating back to last summer.
  The Fed also said inflation remains the "predominant concern,"
suggesting that any easing of monetary policy, which financial
markets expect as soon as next quarter, isn't on the Fed's radar
screen yet.
  "Recent indicators have been mixed and the adjustment in the
housing sector is ongoing," the FOMC said. Meanwhile, inflation 
has been "somewhat elevated," it added.
  The Fed repeted that growth inflation should be moderate going
forward.
  A more upbeat statement at the Fed's previous meeting in late
January had cited "somewhat firmer" economic growth, "some
tentative signs" of housing "stabilization" and inflation that
seemed "likely to moderate."
  The minutes of that meeting, released three weeks later, even
mentioned that officials had discussed whether to alter their
balance-of-risks language, leading to some speculation that a
shift to a neutral assessment was in the offing.
  But economic and inflation numbers have almost uniformly
disappointed since January, forcing the Fed to backtrack somewhat
while sticking to its longer-term forecast of moderate growth and
inflation.
  Gross domestic product growth for the final quarter of 2006 was
revised down from 3.5% to 2.2%. Housing starts and new home sales,
meanwhile, posted double-digit declines in January, though housing
starts rebounded 9% last month. Trouble in the subprime mortgage
market has also stirred public anxiety about how far housing
markets could contract.
  Other data including soft consumer spending in February and weak
business investment suggest GDP could come in below 2% in the
current quarter, well below the nearly 3% pace that's generally
considered the economy's potential.
  But there's no sign that four-straight quarters of subtrend growth
are doing much to quell price pressures. In fact, the consumer price
index rose 0.4% overall and 0.2% at the core level excluding food
and energy last month, while wholesale inflation soared.
  Core CPI is up 2.7% from a year ago. The Fed's preferred inflation
gauge, the core personal consumption expenditures price index, also
ticked up higher since the previous FOMC meeting and remains, at
2.3%, solidly above the Fed's comfort zone of 1% to 2% annual
growth. Inflation expectations, which the Fed monitors closely,
have also crept up in the past few weeks.
  In Wednesday's statement, officials again warned that inflation
could be sustained by high "resource utilization" - a nod to the
tight jobs market and high rates of industrial capacity usage.
  Still, the fact that officials stuck to their longer-term optimism
in the face of unfavorable data and shaky financial markets isn't a
surprise.
  After all, Fed Chairman Ben Bernanke issued an upbeat economic
report card a little more than a month ago when he presented his
semiannual monetary policy testimony to Congress.
  He repeated that assessment for "moderate" growth three weeks ago
to lawmakers, just after a sharp plunge in equity markets and
comments by former Fed Chairman Alan Greenspan had raised fears
about the U.S. expansion.
  -By Brian Blackstone and Campion Walsh; Dow Jones Newswires;

Sincerely, Ilan Levy-Mayer, M.B.A Vice President Cannon Trading Co Inc. http://www.cannontrading.com http://www.E-Futures.com ilan@cannoncapital.com Yahoo IM ilanlevy1970 310-859-9572 800-454-9572 Fax 310-859-0547 9301 Wilshire Blvd. Suite #614 Beverly Hills, Ca 90210 The finest compliment I can receive is a referral from a trusted client. * Important Please Note: Trading commodity futures and options involves substantial risk of loss. The recommendations contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.