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Corn: December corn will generate a short term buy signal on September 21 provided the daily low remains above OIA’s key pivot point for September 21 of 3.35.

Live cattle:

December live cattle lost 30 points on very light volume of 37,243 contracts. Total open interest declined by a massive 2,282 contracts, which relative to volume is approximately 140% above average. The October contract lost 4,562 of open interest. As this report is being compiled on September 21 the December contract is trading 85 points higher and has made a daily high of 108.875, which takes out yesterday’s print of 107.725. The December contract will generate a short term buy signal if the daily low is above OIA’s key pivot point for September 21 of 107.920. Stand aside.

WTI crude oil:

November WTI crude oil gained 19 cents on volume of 1,198,329 contracts. Total open interest declined just 3,973 contracts, substantially below average. The October contract accounted for a loss of 23,961 of open interest. As this report is being compiled after the release of the EIA stats showing a substantial draw in inventories, the November contract is trading up $1.03 and has made a daily high of 45.49, which takes out yesterday’s print of 44.59. For the November contract to generate a short term buy signal, the low of the day must be above OIA’s key pivot point for September 21 to 46.29. Stand aside.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 6.2 million barrels from the previous week. At 504.6 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories decreased by 3.2 million barrels last week, but are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories increased by 2.2 million barrels last week and are well above the upper limit of the average range for this time of year. Propane/propylene inventories rose 0.7 million barrels last week and are above the upper limit of the average range. Total commercial petroleum inventories decreased by 6.0 million barrels last week.

Natural gas:

November natural gas advanced 10.9 cents on heavy volume of 541,754 contracts. Total open interest exploded higher, up 29,896 contracts, which relative to volume is approximately 120% above average meaning aggressive new buyers were entering the market in large numbers and driving prices to a new high for the move of 3.133, which is the highest print since 3.148 made on July 1. As this report is being compiled on September 21, the November contract is trading 1.5 cents above yesterday’s close and has taken out yesterday’s high with another new print of 3.159.

The COT report released last Friday showed that managed money added 19,614 to their long positions and liquidated a massive 70,133 of their short positions. Commercial interests liquidated 10,821 of their long positions and also liquidated 14,024 their short positions. As of the latest report, managed money is long natural gas by a strong 1.51:1, which is a complete reversal from the previous week when they were short by a ratio of 1.008:1. Two weeks ago, managed money was long by ratio of 1.05:1.

It should be noted that the strong reversal into a net long position was due primarily to the liquidation of a very large short position rather than a large addition of new longs. Although natural gas prices can continue to move higher, we think the real fireworks will occur this winter, especially if temperatures become unseasonably cold. November natural gas remains on short and intermediate term buy signals. We have no recommendation.

Gold:

December gold gained 40 cents on very light volume of 121,457 contracts. Despite the low volume, total open interest declined by massive 6,280 contracts, which relative to volume is approximately 105% above average meeting liquidation was extremely heavy for a very narrow range today of $5.90. September 20 was the ninth day in a row in which total open interest declined, which brings the cumulative total from September 8 through September 20 to 39,675 contracts.

As this report is being compiled prior to the release of the Federal Reserve minutes, the December contract is trading $11.90 above yesterday’s close and has made a daily high of 1333.60, which is the highest print since 1332.50 made on September 15. For the December contract to generate a short term buy signal, which would reverse the September 16 short term sell signal, the daily low must be above OIA’s key pivot point for September 21 of $1335.30. We recommend a stand aside posture until such time as the December contract generates a short term buy signal. December gold remains on an intermediate term buy signal.