While long-term commodity prospects are dictated by supply and demand, weather factors and long-term fundamentals, the short-term outlook is sprinkled with volatility. Some commodities have hit levels not seen in some time, reinforcing a new trend of late: The relationship between commodities and the general stock market.

It hasn’t always been the case that commodities and stocks moved in the same direction, but nothing is immune to a price shock these days. And when one domino moves, it can take many others with it.

We don’t foresee much change in this inter connected stocks-commodities relationship until all the recent government intervention takes a strong foothold.

So let’s turn to some commentary…

The Macroeconomic And Technical Outlook For Oil

Over the past three weeks, we’ve seen crude oil futures trade in a wide range between $47 and $54 per barrel.

Macroeconomically, we still have the issue of dwindling worldwide demand versus over-supply. The OPEC oil cartel has tried to arrest the latter by cutting supplies recently, but this trend could keep a lid on prices for the time being.

Although many market participants don’t give much credit to OPEC these days in terms of following through on their commitments, the psychological impact of better days ahead due to the U.S. government intervention can cause quick pops to the upside.

Technically, the oil market has support at the $47.75 area, right around the 50-day moving average. And if the price can break out above $55 convincingly, we could see some clear sailing for oil, possibly up to the $70 per barrel range.

For now, expect to see crude oil trade in a large range between $30 and $60.

As Natural Gas Drifts Lower, Our Optimism Rises Higher

The natural gas market keeps slowly eroding away to lower and lower levels.

Each week, we hear the Energy Administration Information report that that there’s an abundance of underground storage supplies of natural gas – and this, in combination with slack demand, is what’s keeping natgas heading south.

However, the lower this market gets, the greater the buying opportunity will be. We’ve been bullish on the natural gas market for a few months now, and although it’s moved against us recently, we continue to like it for the long-term – particularly with hurricane season around the corner.

I’ve consequently implemented a special options strategy in my Instant Money Trader service that enables investors to get into natural gas at even lower prices than current levels. For more information on how you can join in, click here to read a short guide on the service.

Gold And Silver Nail Our Support Levels… And Bounce Higher

In my column two weeks ago, I noted:

We don’t see the front-month gold futures (June contract) trading much below $870 an ounce after the current pull-back is over, and silver shouldn’t see anything much below $12 an ounce (May contract).

Right on cue, June gold futures tagged a low price of $865 an ounce last week and have since bounced off the very reliable 200-day moving average. The price jumped over $35 an ounce to hit $901 just this morning.

It’s a similar story in the silver market. The metal tagged support just above the $12 per ounce level and has rebounded almost a full dollar to its current level of $12.80 an ounce.

Now that the recent pullback seems to have ended right at those support levels, we have more reason to maintain our longer-term bullish stance on gold and silver. And the current area looks to be a great spot to dip into long positions.

Other than looking at limited-risk option strategies from the COMEX futures options market (where gold & silver futures options trade), you can buy outright shares of the gold and silver ETFs that track the price performance – the SPDR Gold Trust (NYSE: GLD) and iShares Silver Trust (NYSE: SLV) respectively.

Has This Hurricane-Hating Commodity Touched New Lows?

Lastly, we’re continuing to track the longer-term orange juice charts, as the price flirts with multi-year lows not seen since before hurricanes tacked on huge weather premiums to the price in 2004.

It looks like the market may have touched its near-term lows – and with a decent bullish move over the past two weeks, it could now be gearing up for the psychological and speculative fever that comes with the onset of hurricane season.

The best way to take advantage of this situation is through limited-risk bullish trades on orange juice futures options.

Source:  Prepare To Buy These Two Hurricane-Hating Commodities

Oil fell below $40 a barrel on Tuesday, pressured by gloom about prospects for world economic growth which outweighed heightened tensions in the Middle East due to the Israeli-Hamas conflict.

Prices had jumped as much as 12 percent on Monday after Israel launched its fiercest air offensive in the Hamas-ruled Gaza strip in decades.

U.S. crude was down 77 cents at $39.25 a barrel by 1151 GMT, having earlier touched a session high of $40.39.

London Brent fell 60 cents to $39.95.

“With most global economies struggling and credit markets still in an impaired state, it is hard to get too excited about the upside potential in energy markets attributable solely to geopolitical factors unless, of course, these are directed at the heart of the oil supply system,” said Edward Meir of futures broker MF Global.

Oil is heading for a loss of nearly 60 percent this year, its biggest annual fall since futures began trading 25 years ago. It has dropped more than $100 from a record peak above $147 a barrel in July.

“People are still wary of the global economic problems. There is still pessimistic news coming out of the States,” said Gerard Rigby, an analyst at Fuel First Consulting in Sydney.

He said he would also be watching the dollar and stock markets moves.

The dollar slipped against the euro and a basket of currencies, depressed partly by the Israeli offensive, which has helped to dampen dollar sentiment.

The Organization of the Petroleum Exporting Countries has agreed its biggest-ever production cut of 2.2 million barrels per day (bpd) to fight the oil market slide.

The group has cut output three times in an effort to remove about 5 percent of world supply.

OPEC oil supply, excluding Iraq and Indonesia, is expected to fall by 400,000 barrels per day in December as members boost compliance with their deal to reduce output, consultant Petrologistics said.

The estimate indicates OPEC has more than delivered on its pledge to lower supply from 11 members to 27.3 million barrels per day from Nov.1 to prop up prices.

A poll of analysts forecast that U.S. crude stocks will have fallen by 1.4 million barrels last week, while distillate inventories will have risen by 1 million barrels and gasoline stocks increased by 1.5 million barrels.

Weekly U.S. fuel inventory data is due on Wednesday.

LONDON, Dec 30 (Reuters)

Oil rose above $47 a barrel on Wednesday but the gains could be limited as further signs of weakening U.S. oil demand are expected to emerge in weekly data due out later in the session.

The market has fallen $100 a barrel from July’s record high of $147.27 to stand at a 3 1/2-year low, pressured by the gloomy economic outlook and after OPEC deferred a decision on whether to cut supplies until a Dec. 17 meeting.

U.S. crude rose 22 cents to $47.18 a barrel by 1020 GMT. It settled down $2.32 at $46.96 on Tuesday, the lowest settlement since May 2005. Brent crude gained 22 cents to $45.66.

“It’s a correction after yesterday’s fall,” said Christopher Bellew of Bache Commodities, referring to oil’s gain. “It’s coming at a surprising time because the data is supposed to show further builds.”

U.S. stocks data, to be released at 1535 GMT, are expected to show a 1.7 million-barrel rise in crude inventories for the week ended Nov. 28, the third consecutive week of increases, according to a Reuters poll.

Distillate stocks were forecast to show a 300,000-barrel increase while gasoline supplies could be up 900,000 barrels as demand probably fell, even with lower pump prices ahead of the Thanksgiving holiday, some analysts said.

Recession worries could have kept many Americans closer to home than usual this Thanksgiving, the American Automobile Association said.

The U.S. National Bureau of Economic Research said on Monday the current recession, in which the U.S. has been plunged for a year, could be the worst since World War Two.

Adding further pressure on prices, supplies appear to be falling more slowly than expected.

OPEC oil supply fell in November for a third consecutive month as members began to implement a deal to cut supplies in a move to halt the slide in oil prices, a Reuters survey showed on Tuesday.

But the survey suggested the Organization of the Petroleum Exporting Countries met only 66 percent of a pledge to lower output by 1.5 million barrels per day in November, less than analysts expected.

“We suspect that prices could move even lower from here, at least through to OPEC’s next meeting,” Edward Meir, analyst at MF Global, said in a report. “Many producers are simply not moving fast enough to rein in output.”

Alex Lawler, London, Maryelle Demongeot, Singapore

Dec 3 (Reuters)