Alaron Energy Commodity Comment

CHICAGO - Mar 8/07 - SNS -- Following is the oil and ethnaol futures comment from Alaron Trading Corp.

The best description of the Department of Energy's weekly petroleum data report from yesterday could perhaps be best described as something out of this world. Once again our nation’s crude oil supply is lost in a fog and is causing some traders to experience a foggy mountain breakdown.

The Department of Energy caught some traders by surprise when the report showed that crude oil inventories had fallen by a much larger than expected 4.8 million barrels of oil. That was a shock because most traders were actually looking for supplies to increase by 1.5 million barrels. That’s a difference of over 6.0 million barrels. Traders immediately felt the fear. Where did all that oil go? Was there a huge surge of demand? Did oil sipping aliens come down from outer space and suck down our crude supply. There was panic in their eyes! (In fact some kind of looked like oil sipping aliens for awhile).

Well the Department of Energy, not wanting to start another alien area 51 like controversy, was quick to calm those fears when it said that the dramatic drop in crude supply was, “due in part to delays in the Houston Shipping Channel". Oh thank goodness its only fog! What a relief! The DOE said oil imports hit the lowest level since October 2005 averaging less than 8.9 million barrels per day which was down 650,000 barrels a day from the week before. This is a very plausible explanation for the drop in supply or at least a very good cover to hide the horror of the oil sipping aliens from the American public.

Just to be sure we may have to do a bit of speculative investigation. Ok, let us assume for the moment that the government is telling the truth and there are no oil sipping aliens running about. Then let us assume that if it were not for the fact that Houston was buried in fog, that imports would have been on a par with the week before. If imports were down 650,000 barrels a day then 650,000 times seven days would account for roughly 4.5 million barrels of oil. That means that it is possible 4.5 million barrels of oil was lost in the fog. Now take that number and subtract it from the reported drop of 4.8 million barrels and you still show a bullish draw of about 300,000 barrels a day. And to get to analysts expectations of a build of 1.5 million barrels you would then have to assume that if the Houston Shipping Channel was open that crude oil imports through the channel would have increased by 1.8 million barrels last week to get close to a neutral to bearish number.

So the bottom line is fog or no fog the number was bullish for crude even if we see the crude supply surge in the coming weeks. Still I know this does not disprove the theory of oil sipping aliens so I am going to keep an open mind just in case.

We’re long April Crude from apprx 5925 - leave stop at 5940. Target 6700.

Buy April RBOB at 17600 - stop 17400.

Buy April heating oil at 17600 - stop 17400.

We’re long April natural gas from apprx 720 - stop 701.

Phil Flynn

Alaron Research Team

800.935.6487

pflynn@alaron.com

www.alaron.com

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