Alaron Energy Comment

CHICAGO - Jul 24/08 - SNS -- Following is the energy futures comment from Alaron Trading Corp.

Thrills, chills and oil spills.  Oil continues its big drop even as Dolly strengthens and oil gets spilled in the Mississippi. Oil tried to pop  as crude inventories fell unexpectedly but it was not near enough to offset the large increase in both gasoline and distillate supply.

The oil  bears are coming out of hibernation after sleeping the first half of the year and may control the market into the winter. The game has changed and the bullish frenzy has died down dramatically  and the charts and refiner moves signal more trouble ahead.

Oh sure US crude supply fell by 1.6 million barrels which was a bit of a  surprise but they fell as refiners surprisingly upped product production. The biggest mystery is why they upped production with demand so weak but they did nonetheless.

In the latest week  gasoline supply rose by 1.6 million barrels. Gasoline supply surged by 2.9 million barrels, putting them well above average for this time of year and about 6% above where they were just a year ago. Basically this means  we are seeing lousy demand. The EIA says that over the last four weeks gasoline demand has averaged 9.3 million barrels a day that was down a whopping 2.4% from a year earlier. May I remind you people that this is July!

Distillate supply that supposedly was on its way to China keeps finding its way back into US inventory. Distillate fuels surged by 2.4 million barrels and are now according to the EIA in the upper end of the average range this year.

The combination of demand destruction and some  strength in the dollar seems to suggest that no matter how the bulls try to hype peak oil, no market goes up that fast with some impact on the demand side of the equation. The myth that emerging market demand would totally offset the loss of US demand is now being shattered. Price still matters to the demand side of the equation and eventually that will always be the great equalizer in a bull market.    

An oil barge and tanker mishap caused a spill in the Mississippi near New Orleans. Reuters news says  that collision spilled over 400,000 gallons of fuel and prompted the US Coast Guard to close a 29-mile stretch of waterway around New Orleans. About 400,000 gallons of thick, slow-to-evaporate fuel spilled from the barge, but nothing leaked from Tintomara, officials.    

The markets are changing fast so you need to keep up on the latest changes. Call for intraday trade updates and to open your account  at 800-9356487 or email me at  pflynn@alaron.com.  See more of me when you tune in the new and exciting Fox Business News!

Sell September crude at 12570 - stop 13300.

Stopped on  long  August RBOB from  apprx 31550  at apprx  30700. Sell August RBOB at 31500 - stop 31700.

Sell August heating oil at 37500 -  stop 37800.

Stopped on long  August natural gas from apprx  990 at apprx 970. Sell August natural gas at 1050 -  stop 1070.

Have a GREAT day!

Phil Flynn

Alaron Research Team

800.563.9510

pflynn@alaron.com

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the author(s) that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Alaron Trading Corp. its officers, directors, employees and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. and/or STAT Publishing or its staff and/or management.