Alaron Energy Commodity Comment

CHICAGO - Apr 5/07 - SNS -- Following is the oil and ethnaol futures comment from Alaron Trading Corp.

Easter gifts and inelastic gas. What could be more wild and crazy than yesterday's energy market trading session (excluding of course Iranian President Mahmoud Ahmadinejad who is proving once again that he is one a wild and crazy guy)? Mr. Ahmadinejad played havoc with the market when giving his little speech. Traders feared the worst when Mr. Ahmadinejad spoke of the importance of defending Iranian territorial waters and then pinned metals on the Iranian Soldiers that captured the 15 British soldiers. But then Mr. Ahmadinejad, always eager to please, said as an Easter gift to the British people he would release the British soldiers. Hasn’t this guy ever heard of Easter baskets? And second of all I don’t think that if you’re going to give someone a gift you give them something that was theirs in the first place. I mean that’s re-gifting taken to the most extreme. Well in all fairness Mr. Ahmadinejad did buy the soldiers new suits of clothes which seemed to be a nice gesture though I don’t think the ties he picked out really worked. Perhaps Mr. Ahmadinejad could use some time with the Fab-Five.

Of course who is Britain to look a gift horse in the mouth?

In reality the more moderate influences in Iran probably talked a bit of sense into Ahmadinejad's head if that is at all possible. The pressure to release the hostages was building and Mr. Ahmadinejad thought it better to release and turn the whole release into a big party where the captive soldiers met with the Iranian President sharing handshakes, jokes and Easter Greetings I'm sure.

Just as the market was trying to digest exactly what this love-fest meant for the energy complex the Department of Energy blindsided us with a wildly bullish 5 million barrel drop in gasoline supply. For gas consumers the DOE report can best be described as disturbing at the very least. Gasoline supplies are tightening at a disturbing rate and that could mean only bad news for the consumer as we get ready to start a new summer driving season. Despite the fact that gas prices are rising it seems that demand continues to grow. Gasoline was once thought to be very elastic has been defying the conventionally held ratios and are boarding on inelastic. Gasoline futures surged with the DOE reporting record demand and disappointing gasoline output. Supplies of gas have now dropped for the 9th week in a row and gasoline supplies have fallen by 17 million barrels during that time. Gasoline supplies have fallen well below the average range for this time of year and unless the refineries make a miraculous turnaround supplies could tighten further in the coming weeks. Refinery runs were steady when they were expected to rise and oil inputs into refineries are running below average coming in at 14.8 million barrels per day. That rate has got to improve or we may see demand just stay out in front of supply.

Still despite the fact that demands is at record highs, Matt Chambers at Dow-Jones Newswires points out that last week's shocking implied demand number night be a bit overstated due to a DOE error. It seems that some of this week's draw in gasoline should have been in last week's report but still even with a downward adjustment the demand is incredible.

Crude oil on the other hand rose by 4.3 million barrels which held back the market somewhat. Still the spread between the Brent crude and the light sweet crude continues to widen. The Financial Times warns that if that trend continues and the WTI (West Texas Intermediate i.e. sweet crude) remains at such a steep discount it could start to affect future oil imports into the US as oil exporters will sell to European destinations that use Brent as a reference price. And as refiners come back on line the demand for crude will intensify yet if imports lag then we will cut through supply very quickly.

Al in all the report means energy is all systems bullish.

Today we will get the natural gas number! The out look is for a injection of about 50 bcf.

Buy May Crude at 6350 - stop 6100.

Stopped on short May RBOB from apprx 20400 at apprx 20600.

We're long May heating oil from apprx 18300 - raise stop 18400!

Buy May natural gas at 720 - stop 670.

Phil Flynn

Alaron Research Team

800.935.6487

pflynn@alaron.com

www.alaron.com

DISCLAIMER: The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers, directors, employees and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. or its management.