PFGBEST Energy Comment

CHICAGO - Sep 13/10 - SNS -- Following is the energy futures comment from PFGBEST Research.

Just When You Thought Gas Prices Were Going To Go Down

By Phil Flynn

The Energy Report for Monday, September 13, 2010

Just when you thought gas prices were going to go down. A pipeline leak and strong economic data out of China and relief that the Basel banking regulations did not go too far is conspiring to set a positive tone in the oil markets. Chicago gets the shaft. While according to Trilby Lundberg the national average gas price fell 0.8 cents a gallon to $268.99, Chicago and the Midwest prices soared. Enbridge Energy Partners LP shut a major oil pipeline in Romeoville right outside of Chicago that ships crude from Canada to refineries in the Midwest. The impact was felt across the markets as refiners may be forced to reduce runs. This can also increase the demand for higher yielding crudes as well to maximize output. Thanks goodness there is plenty of supply in storage or this could have really been worse. The market seemed to like the Basel rule or maybe they just like the finality of it all. Global blinking regulators agreed on a new set of rules designed to increase banks capital buffers to better be able to withstand large market movements but at the same time gave them more than a few years to get up to those levels. The global markets and the risk takers liked the deal. They also liked data out of China that showed a 13.9% increase in August industrial production which was higher than expectations as well as a retail sales data that was strong. The China inflation rate in August was 3.5% which was not bad considering the other data. This brought the buyers of commodities and oil back. The Obama administration thinks that this is as good as time as any to pick a fight with China over trade. Treasury Secretary Tim Geithner said that, "China took the very important step in June of signaling that they're going to let the exchange rate start to reflect market forces. But they've done very, very little, they've let Mr. Geithner opted earlier this year not to brand China a currency "manipulator" and instead it move very, very little in the interim," Mr. Geithner said in an interview with The Wall Street Journal. Must be an election coming up. Stop watch! Now it is Julie! While Hurricane Igor is a category 4 hurricane it looks like it will miss the Gulf. A new storm named Julie looks like it will miss also but it may be too early to tell. We have another tropical disturbance in the Gulf with a 40% chance of becoming a named storm but it is too early to tell what impact it will have as it will develop close to land if it does. Call for the latest trade updates as conditions are changing rapidly. Call me at 800-935-6487 or email me at pflynn@pfgbest.com.

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