As consumer spending is beginning to fall in the US, the oil market will have to decide whether it is a commodity that will act as a hedge against inflation or a commodity that is overvalued due to slowing demand. And the larger issue is whether or not world wide oil demand will expand at the same pace if the US drifts into recession. Will countries like China grow at the same pace even if the world's largest consumer of just about everything slip farther into economic uncertainty and perhaps even gloom?

For the  oil market  one of the driving factors squeezing world wide supply has been the incredible robust demand for oil in places like China. Now there are some that say China can continue to have the same effect on oil prices that they have had in the past even if   US falls in a long recession. But China has bubble problems of its own that may pop if the us consumer holds onto their wallets. The ECB is worried about inflation and so too is China as they fear that their red hot economy could implode. Some are more optimistic. Bloomberg news reported this morning that, “China is starting to gain control of its turbocharged economy, just as a U.S. slowdown raises the risks of doing so.â€� They say that, “A narrowing trade surplus and declining money-supply growth are among the first signs that the world's fourth-largest economy is pulling back from its fastest expansion in 13 years. The government has raised interest rates six times in a year, restricted credit, frozen some prices and let the currency appreciate to damp growth and inflation.â€�

So if China is slowing down and the US slips into recession could the China slow-down be even more pronounced? Bloomberg says, “The risk is that, with months of effort to cool off China finally taking hold when the U.S. is already flirting with recession, both main engines driving the global economy may power down at the same time.â€� For oil of course this would be big time bearish news.  In fact the most bearish possibility we have seen  in many years.

It's good to be green! And 2008 is the year of green so much so old time industrialists will be wearing the green all year long. The Financial times is reporting that GE will today announce plans to double its investments in renewable energy to 6 billion by 2010 in the latest sign of a push by big companies to capitalize on concerns over global warming and pollution.

Snow storms are blanketing parts of the northeast today!

A deal is cut to end the quarrel over the Kashagan oil field when the government of Kazakhstan allowed doubling its stakes in the venture. It's clear oil companies now have to take what they get to when it comes to securing  more oil supply.

Don't you just take what you get! Sign up for the Phil Flynn Energy Blast and sign up for a free trial of Alaronenergies! It's time you followed through on your New Years resolution to open your account with me. Just call me at 800-9356-6487 or email me at pflynn@alaron.com.

 

We are short Feb crude from apprx 9999 -  lower stop to 9720!!

 

Sold Feb heating oil  from apprx 255 -  stop 265.

 

We're short Feb RBOB from apprx 245 - stop 250.

 

Stopped on long  Feb natural gas from apprx 729 at apprx 809!!!  Sell Feb  natural gas at 855 - stop 865.

 

Have a GREAT day!