Alaron Energy Comment

CHICAGO - Mar 4/08 - SNS -- Following is the energy futures comment from Alaron Trading Corp.

Get ready to pop that cork again! If you popped a bottle of champagne every time oil made a new record high, your wine cellar is probably almost empty by  now. Yet hopefully you saved a bottle of the good stuff because this record deserves it. This was not just another record high for oil  but according to Dow Jones News this was a breach of  the all time inflation adjusted high of   $103.76 set back in 1980. Yet even that achievement might not be enough to satisfy the oil raging bull as commodity prices continue to be the most powerful force in the entire investment world.

The oil drive yesterday was once again mainly a commodity crazed rally and the question we have ask today is whether or not oil can divorce itself from the rest of the commodity complex and focus again on slowing demand and rising supply. OPEC is meeting today and  denying that they are running out of oil yet there was nothing they said that could account for another record breaking rally.

Some thought the rally was due in part  to  growing tensions between Venezuela and Colombia as troops were moved to their respective boarders. Some fear that war could breakout. Columbia is blaming Venezuela for meddling in the affairs of Ecuador and Columbia and that's what's increasing tensions, a charge that Venezuela denies. Columbia sent troops into Ecuador and killed a guerilla leader. Chavez sent troops to the Columbian boarder and it is possible that the conflict could escalate.  For oil that can turn out to be a worry.

Another story that is feeding the bullish flames is the fact that the Russian government once again cut off gas supplies to the Ukraine over unpaid bills. The Ukraine says that the cut off  of supply is black mail. This latest dispute is a reminder of the growing vulnerability of Europe when it comes to supply. Is this dispute about money or is it about politics? The Ukraine says that they are owed money from Russia because they allow Russia to use their pipelines to transport gas to Europe. Russia claims they are  owed over $600 million in unpaid gas bills. This was supposed to be settled as Russian President Putin - soon to be Czar  Putin - and President Yushcenko signed a deal that the Ukraine would pay 1.5 million in gas debts. In the mean time it looks like that deal is kaput.

Yet with slowing demand it seems that at the end of the day it's still  more about oil as a commodity and a hedge against the dollar. What slowing demand? Well the EIA says oil demand was flat in 2007 and we only saw modest increases in demand for gasoline and distillate. Gas and distillate still hit records but the growth of demand fell far short of prior years. More recently the EIA said that gas demand in December had its biggest drop since the days after hurricane Katrina. Gas supplies are at a 14 year high and for now at the pump that does not matter.

On the good news front Royal Dutch shell lifted its Force Majeure on oil out of its Nigerian Forcados and Bonny facilities. This may be in part why oil pulled back for those rocking record highs.        

See me today on Fox Business and Sky News Australia and I'll be spending some time with my good buddy Spike Odell on WGN Radio. Call me at 800-935-6487 or email me at pflynn@alaron.com to open your trading account!

We're long April crude from apprx 10000 -  raise stop to 10130!

Buy April RBOB at 25900 - stop 25600.

Buy April heating oil at 27500 -  stop 27200.

We're long April natural gas from apprx 900 -  raise stop to 950!!

Have a GREAT day!

Phil Flynn

Alaron Research Team

800.563.9510

pflynn@alaron.com

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