Alaron Energy Comment

CHICAGO - Mar 10/08 - SNS -- Following is the energy futures comment from Alaron Trading Corp.

Supplies aside gas prices are just too high. When does supply vs. demand just transcend price? Well usually when it comes to gas prices.

Record oil prices have led to record gas prices despite the fact that this nation is swimming in supply. The Lundberg Survey reports that the average prices of a gallon of gasoline hit a record $3.20 as a national average last week. That, according to Lundberg, is a 9 cent increase from the week before and broke the record that was set last May.

But as we all know it isn't just about gas but also about  crude oil  and the value of the dollar. Crude continues on this dollar driven rally and we are creating a bubble that at some point will burst. When that might be is hard to predict but when it does, the resulting sell-off will be huge. The problem is that until it does we obviously can still go higher. The  $110.00 area  is the next bullish target for crude.

Of course many say forget about the dollar and slowing demand for oil in the US.  What the rally in crude is really all about is a realization that the world is running out of oil. Today's Financial Times reports that oil finds in the Gulf of Mexico hit the lowest level by oil majors in the last 10 years. "Disappointing  oil exploration results in the Gulf of Mexico are upsetting the hopes of US oil majors for big new findings in an area free from interference by foreign state-owned oil companies.â€� The Times says that, “The deep-water Gulf of Mexico is one of the few areas to which the majors have access with out fear of intervention by state-owned oil companies.â€�

Market realities are sometimes in the eye of the beholder especially if those realities are  as addicted to dollars as the US is addicted to oil. Reuter's news reports that Mohammad Ali Khatibi, deputy director of international affairs a t the Iranian Oil Company, said that US calls for an increase in crude oil production made before last week's OPEC meeting did not take into account “market realtiesâ€�. Mr. Khatibi said that, “This demonstrates the Americans are looking for a way out their current   economic condition.â€� Of course perhaps the main reason OPEC refused to increase production was OPEC's own bad current economic condition.  The Financial Times reports that, “Many oil-producing countries cannot afford to let the price of oil drop as the revenue they require to assure macroeconomic stability at home continues to increase, a new report by PFC Energy, a leading oil consultancy…â€�. The Times says, “Owing to increased government spending and domestic consumption, as well as inflation and the erosion of the dollar, the threshold oil price has risen for every OPEC member with the exception of Qatar since 2000.â€�

That fact blinds OPEC to the fact that if prices rise too fast, it may hurt their long term demand prospects.  OPEC has lost that fear because as Mohammad Ali Khatibi points out,  â€œIn recent years the demand for oil has not so much linked to demand of member countries of the OECD and has mostly stemmed from growth in demand from consequently the US economic growth will not have such a strong impact as in the 1980's on the prices of international oil demand.â€�

Check me out of the Fox Business Network today and call me at 800-935-6487 or email me at pflynn@alaron.com to open your account! You can get signed up for a free trial of www.alaronenergies.com too.

Buy April crude oil  at 9920 - stop 9820.

Buy April RBOB at 25100 -  stop 24900.

Buy April heating oil at 28200 -  stop 27900.

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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