Alaron Energy Comment

CHICAGO - Mar 6/08 - SNS -- Following is the energy futures comment from Alaron Trading Corp.

OPEC points the finger. I am not sure what finger mind you but I am sure you could imagine. OPEC points the finger of blame for the rising cost of oil right at the door steps of the United States of America. Why does this band of conspirators feel that the fickle finger of  blame for rising oil prices is pointed at  this great country of ours? Well they  say  it is our fault  because of our supposed  mismanagement of the US  economy. And seeing how oil rallied almost 5 dollars after OPEC made their decision to conspire to withhold supplies from the world market, it is obvious that the US had to hurry up and really do some quick economic mismanagement to get oil prices to respond so quickly.

The world is in awe of the dynamic and diversified economic powerhouses in the cartel like Iran and Algeria and wish  we too could be as savvy as them. Long gone are the days when OPEC had their collective hands out begging the world to buy their oil to keep their economies from clasping. Or begging Non -OPEC producers like Russia and Mexico to withhold supply from the market so they could make a living. Ah yes, OPEC is so much smarter than the poor little USA and based on their decision yesterday, they obviously think they are smarter than the market.

Oh sure OPEC has a point in as much as the housing crisis in the US is causing selling of the dollar driving up the price of oil like a rising temperature. But as with a temperature, if you continue to ignore the symptoms and  don't get  treatment,   the temperature will rise to the point where it will kill you and then you go from red-hot to freezing cold. The market is saying very clearly that it wants more oil, damn the perception of supply and damn the perception of demand. Just like a temperature in the human body, the rising price of oil is saying the market is sick and it needs some medicine in the form of more oil to battle the disease. In a normal market with prices at all time highs, producers, if they had the ability, would pump more not less oil. But not when you conspire to just serve what you think will be your own best interest.

The US has made mistakes in regards to  housing but if anyone is guilty of economic mismanagement it is indeed the OPEC cartel. By withholding supply when the market keeps rising they are making the problem worse and will be the blame if the problem spreads.

Of course some say that OPEC doesn't matter because they don't have enough spare capacity to make a difference. Then let them prove it by sending us all the oil we can handle. Let's build up those inventories. Why would such great economic thinkers care if they get paid now or get paid later? They can always invest that money and do great things with their economies they way they have with the great oil booms of the past.

In fact in today's Financial Times the report that the UN has some ideas of what OPEC should do with their money and that is to invest it in food. "The United Nations Food and Agriculture Organization has called on the oil-producing counties of the Middle East to invest more of their oil windfalls in developing agriculture in their region, in order to address the serious threat to food security posed by water scarcity and climate change.� No mention of indoor ski hills.

OPEC also lightly rebuked Exxon in its dispute with  them saying, “in the exercise of its sovereign rights over its natural resources in accordance with international law disputes should be settled through good faith and amicable negotiations and excluding ex parte pre-judgment measures with will make finding fair solutions more difficultâ€�. In other words do not listen to Doug Lewellen and do not take them to court!

Oil also got help in its bullish explosion by a surprise drop in crude oil inventories. Once again the culprit seems to be the bad weather in the Gulf Coast as a big drop in imports probably caused the surprise draw. Still the big story in the report is the poor demand for gasoline.

Hey brother can you spare a gallon? I have been saying that the price of gas is not reflecting weaker demand.  The Wall Street Journal today said, “Yesterday's rise underscored the markets many contradictions. Despite the price increase and drop in overall US commercial inventories, gasoline supplies hit a 15 year high amid increasing signs that fuel prices are cutting into American driving habits.â€� The EIA reported that gas supplies rose by 1.7 million barrels putting it well above average. The say that gas demand over the last four weeks is about 9.1 million barrels a day only 0.4 above a year ago which is pathetic.

Yesterday I said to buy breaks but today that might be harder to do. The $105.00 a barrel was a first technical target. If we close above $105 solidly, the next logical longer term target is $110. If we fail to close above $105 we could see a quick correction back down to $99.00.

Get Foxy! Check out the Fox Business Network and check me out on Sky News Today!

Also sign up for your free trial of Alaronenergies! Call me to open your account at 800-935-6487 or email me at pflynn@alaron.com.

Buy April crude oil  at 9870 -  stop 9700.

Sell April RBOB at 27480 -  stop 27620.

Buy April heating oil at  28600 -  stop 28400.

Buy April Natural gas at 927 - stop 907.

Have a GREAT day!

Phil Flynn

Alaron Research Team

800.563.9510

pflynn@alaron.com

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