Alaron Energy Comment

CHICAGO - Mar 11/08 - SNS -- Following is the energy futures comment from Alaron Trading Corp.

Anybody out there remember the US  dollar? For the crude oil it's just same ol', same ol' as another new record high is made.

Oil rewrites the record books as the once mighty dollar sink's further into obscurity. Things are so bad that Vice President Dick Cheney is headed to the Middle East to try to get the Israelis and Palestinians to try to pursue peace and  convince the Saudis to pump more oil. Actually I think he might have more success with the peace thing.

Sure winter demand  is playing a part as China's oil demand is surging,  yet as I have said, this rally in oil isn't about supply and demand right now. It's all about crude oil being viewed as a financial instrument and not a hard commodity.

Obviously  opinions differ. One school of thought says it's all about market confluence.  Last week as reported by Market Watch, Exxon Mobil's CEO Rex Tillerson pined the blame for the recent run up in crude oil  price on a confluence of market factors that have little to do with supply and demand fundamentals. (Oh yes the good old days when supply and demand seemed to matter.) Mr. Tillerson called the recent move in oil “Pretty crazyâ€�, saying a weak dollar accounts for about a third of the recent oil run. Mr. Tillerson puts another third on geo-political uncertainty and the rest on market speculation. Now correct me if I am wrong  but no where in Mr. Tillerson's little pie does he attribute any of the recent moves on oil to supply or demand, unless he is getting another slice of the pie from somewhere. Maybe has using quantum physics but the last 30% rally in oil, according to the CEO of Exxon Mobil, has nothing to do with supply and demand but other factors. In fact Mr. Tillerson says that, “In terms of fundamentals, fear of supply reliability is overblown and that despite concerns about geopolitical instability hurting oil supplies, such disruptions are actually quite rareâ€�.

Yet at the same time Mr. Tillerson alluded to the demand side when he said that, “So far Exxon Mobil hasn't seen any big drop in demand for oil outside the United States, where the growth rate has slowed slightly below the 10 year average.�

Maybe the key for oil is demand outside the United States. If the US economy gets worse before it gets better, will world demand be as strong? The weak dollar has cushioned the blow somewhat for the rest of the world but if US consumers quit consuming it is hard to imagine their will be no oil demand growth damage world-wide. So how do you play it? Buy big breaks sell big rallies. The next best chance for a top on oil is $110.

See me today on The Fox Business Channel! Also sign up for your free trial of Alaronenergies and the Phil Flynn energy Blast! Call me at 800-935-6487 or email me at pflynn@alaron.com to open your account.

Sell April crude at 11020 stop 11120.

Sell April RBOB at 27400 -  stop 27600.

Sell April heating oil at 30200 -  stop 30500.

Buy April natural gas at 960 -  stop 950.

Have a GREAT day!

Phil Flynn

Alaron Research Team

800.563.9510

pflynn@alaron.com

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