wmeubank@ocp.kcmo.com
THE REAPER
P.O. Box 84901,
Phoenix, Arizona
(June 26, 1997) ENERGY COMPLEX: Extremely hot weather should support natural gas. The saber rattling between the U.S. and Iran should support the remaining members of the energy complex–crude oil, unleaded gas, and heating oil. Seasonally, energy should be supported, too. Plus, the complex is oversold technically and psychologically and has dropped into support. Moreover, OPEC's share of world oil production is increasing. This is supportive to the energy complex. The trading public is too bearish on unleaded gas and heating oil. The June 20 Money section of U.S.A. Today cover story headlined, “Soft Market For Crude Oil Drives Gasoline to Lows.” Contrary opinion suggests we are at a low in the energy complex on the summer solstice/end-of- quarter turning point.
RECOMMENDATION–Futures investor's who purchased December 1997 crude oil call options–hold. Add scale down positions on every $1 drop to $15. Futures investors may purchase December crude oil contracts on a strong close above $20 with $19.30 open protective stops. Futures investors long September natural gas use $2.10 open protective stops.
R.E. McMaster, Jr
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