Alaron Energy Comment

CHICAGO - Feb 8/08 - SNS -- Following is the energy futures comment from Alaron Trading Corp.

About face, forward march! The petro markets did an about face yesterday, perhaps gaining some more momentum from a US stock market about face and word that the ECB may be getting ready do to a little about face of its own. Throw in a little political face saving with the Senate passing a stimulus bill and the oil bulls again are trying to establish a bottom.  

Technically the oil  bulls have been amazing getting oil to bounce once again from key trend lines and support. Yet to succeed over the long haul they will have to continue to get help from stocks and other commodities to keep the bull drive alive.  

It is clear  that oil is not ready for the major breakdown right now with a weekend of wicked winter weather predicted and easy money raising hopes for a little commodity price inflation. But it is also obvious that for the market, major issues still exist.  

Oil inventories  surged this week and  should rise again next week as   heat related demand growth will continue to be soft. Ultimately the question is how long it will take for the Fed fiscal espresso shots will take to reawaken oil demand growth. They key for the bull market in oil being as consistent as it was for the last 5 years has been demand growth that exceeded expectations both here in the US and abroad.  The furious demand growth currently is not there and with many lowering their expectations for economic growth, it just will not be there. That is unless of course the economic data does a huge about face and the data that we are seeing now is the bottom of the trough. The oil bulls are hopeful and I have to say I admire their optimism.      

The ECB held rates steady but hinted that perhaps they are starting to worry  that its time to  get ready to join the rest of the world  and cut rates. There are signs that we are seeing   slowing growth in some of the Euro Zone economies. The Bank of England cut rates as expected and Jean-Claude Trichet is starting to worry that maybe, just maybe he's falling behind the curve. The ECB focus has been on inflation still trading uncomfortably above their target rate. They really hate to admit that they are starting to feel the fallout from the global slowdown but it's getting harder to do that with some recent economic data.  

The bulls also found more support as the winter weather is helping them out. Not only are we going to get another blast of cold, but  bad storms in Mexico shut down some exports.

Then  we have the eo-political stuff rearing its ugly head. A force Majeure from Shell Nigeria on some oil exports due to recent Nigerian rebel violence. We also have Russia  threatening to cut gas supply to the Ukraine. And new worries about Iran and its nuclear and missile capability.  

Natural gas had another big draw and is finding support on cold weather. Still the nat gas should be close to a peak! Sell rallies. Need an account to do so? Then it's time to me Phil Flynn at 800-935-6487 to get yours open!

Reports that Exxon Mobil obtained a court order freezing Venezuelan assets in Europe are also favoring the bulls. Lack of capital may hurt Venezuelan production because of the lack of investment. And what's more, expect Venezuelan president Hugo Chavez to do something stupid like try to retaliate in  some way.

Still with these issues the key is still the economy! Oil will break down but we may have to wait.

Don't have Fox Business yet?! Then call your cable operator and demand it! And as long as you're in a demanding mood, call me and demand a free trial to Alaronenergies Also get on the Phil Flynn Energy Blast! Just call 800-935-6487 and if you're worried about the volatility call for some safer option recommendations! Or if it's easier for you email me at pflynn@alaron.com.

Late breaking...OPEC may cut output

to defend the 80.00 per barrel mark.

And this just in...North Sea Brent  crude oil daily shipments fell 15%.  

We're short  March crude oil from apprx 8700 - stop 9200.

We're short  March RBOB  from apprx  22900 - stop 23500.

We're short  March heating oil  from apprx  245 -  stop 255.

Stopped on short  March natural gas  from apprx 812 at apprx  820.

Sell March natural gas at 850 -  stop 857.

Have a GREAT day and weekend!    

Phil Flynn

Alaron Research Team

800.563.9510

pflynn@alaron.com

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