Alaron Energy Comment

CHICAGO - Dec 13/07 - SNS -- Following is the energy futures comment from Alaron Trading Corp.

The bulls' last shot. What did it take for oil bulls to revive their hopes of a shot at $100.00 a barrel by the end of the year? Lets see, hmmm. Fog that shut down two shipping channels.  Down south, a freakish ice storm that knocked out power to some major pipelines. Wire  reports that exclaimed, “Oil spill in the North Sea of Norway spilling thousands of tons of oil spilling into the North Sea.â€�  A drawdown in distillate inventory on the weekly inventory report.  A refinery fire in Texas and oh yeah, about 80 billion in liquidity courtesy of your Federal Reserve. I mean this kind of stuff just happens every day!  

Just a typical ho hum day in the world of energy! Oil never could close below 87 to cement the bear oil case and  now we have to see if the market can close above 95. Yet despite the freakish $4.00 plus oil rally don't bet on it.  

The energy complex went on a buying   mania binge  on all the bullish factors that you can throw at a market. Welcome to a new world of oil price volatility  with moves that used to take weeks are taking hours. Yes there was bullish news but the move straight up seems to be on shaky ground. Unless the Fed Freaks have another 80 billion dollars to pass out if the last 80 billon does not do the trick that is. Maybe they will admit they are behind the curve and feed us perhaps an inter-meeting interest rate cut. The Fed is freaked out, the floor traders are not happy, and the energy markets keep roiling along.

As far as the inventory report was concerned,  it was bullish because it was not bearish enough. With all the supply disruption due to the ice storms fog etc and a Fed that is doing its best to smash the dollar, the market needed to be reassured by a bearish report. What we got was really kind of a mixed report. Most pointed to refinery runs or the draw in distillates as the main bullish factor, but without the Fed and the freakish storm, was it really worth a $4.00 plus  per barrel rally? The EIA reported that distillates fell by 800,000 barrels leaving the supplies of over all distillates 6.9 percent below year ago levels. Refinery runs came in at 88.8%. Gasoline supplies actually rose by 1.6 million barrels and crude supplies fell by 700,000.

Obviously the volatility is incredible.  I am still bearish on price and will look to sell short again. If we are wrong, the market will have to close above $95. If it does not, barring any more freakish happenings or some extremely cold weather, we could still see s substantial downside move from these levels. If we fail to close above 95 we should get ready for a test of 87. A close below 87 would open up the floodgates for a larger move back to the low eighties and perhaps longer term to the mid seventies. Position trades at this point are hard so you may need to reduce the risk by hedging your positions with options. Call me to find out how at 800-935-6487 or email me at pflynn@alaron.com to open your account.

Stopped  on short January crude from  apprx 8890  at apprx 9200. Sell January Crude at 9470 stop 9580.

Stopped on short January heating oil from apprx 25400 at apprx  26000. Sell January heating oil at 26800 -  stop   23100.

Stopped on short January RBOB from  apprx 229 at apprx  236. Sell January RBOB at 24300.

We're long January natural gas from apprx 710 -  raise stop to 740.

Have a GREAT day!    

Phil Flynn

Alaron Research Team

800.563.9510

pflynn@alaron.com

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