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the energy report - The Old Days.
Phil Flynn I Alaron Research - Commodities - 15.05.2009
Do you remember the old days in the oil market! You know, like a year ago. Like the days when the energy complex would rise for the slightest reason. For example, a storm cloud in the Gulf of Mexico or a refinery outage in the Virgin Islands and we'd get a pop higher. Remember when supplies and spare production was so tight that even the slightest hint of even a tiny disruption would send energy prices through the roof. Almost like if you spilled some gas at a gas station it would make oil run up a buck. Or how about the reliable stories about good old global warming and how the weather patterns with the warmer than normal winters meant that the planet was doomed. And that if we didn’t stop burning fossil fuels this very minute we would become as extinct as the dinosaurs.
Oh sure, we have oil making another bull run, yet the stories surrounding the rally just seem to lack the excitement and drama that kept oil traders glued to their screens. And we know that it was not climate change that made the dinosaurs extinct but the fact that the dinosaurs were heavy smokers. Some of them maybe three pack a day! Of course now in spite of the fact that oil prices have gone up, the type of stories that used to send us into a tizzy barely get a mention. All this talk of the intricacies of macro economics like exchange rates and the impact of quantitative easing and running record budget deficits just doesn’t seem to have the same allure and reliability of those more exciting stories. Ok, ok, maybe the pirate stuff that has been going on has been a little compelling yet it does not seem to have the same type of market impact and explosive exciting and romantic moves that we had in the past. Darn that spare capacity. I mean this isn’t like Pirates on the Caribbean these are pirates off the coast of Somalia. And let’s face it Somalia isn’t exactly an oil producing powerhouse and where is Johnny Depp when you need him. Sure they hijacked or sea jacked a huge oil tanker a few months ago and they have got on a few oil tankers over the years but you cannot count on them to hijack only oil tankers. But, what if you had a band of pirates from a country that was a major oil producer? Now surely that would make oil rise. Well guess what. It is happening and it is happening in Nigeria. It appears that Nigerian militants are learning to become pirates and taking a page out of the Somalia pirate’s playbook. Take the Bloomberg story about the Nigerian militants in Nigeria’s oil-rich Niger River delta region that hijacked two vessels and attacked military positions in two days of fighting. Now if that had happened a year ago oil prices would have screamed. Bloomberg reports that a tanker, MV Spirit, charted by the Nigerian National Petroleum Corp. to deliver condensate and an unnamed cargo ship were seized along with their crew citing claims from Colonel Rabe Abu-Bakr. Bloomberg says that the Movement for the Emancipation of the Niger Delta or MEND, the main rebel group in the region, attacked two marine bases at 2:00 a.m. local time and destroyed five military gunboats and various support vessels. MEND has extended an initial 24-hour deadline for oil companies to evacuate the region within 48 hours and declared a no-fly zone for helicopters and sea planes operating on their behalf with effect from midnight on May 16. Of course oil still seemed more focused on the stock market and where the options might settle as opposed to any fear of loss of production, not even that high yielding high quality sweet crude out of Nigeria. And what about building that summertime hurricane premium into the oil and gas market? You know that as Al Gore warned us about those darn inconvenient truths that because of global warming we are going to always see those massive hurricanes. In fact Al has proven to himself that the two main causes of hurricane Katrina were global warming and the Bush administration. So surely again this year with another year of greenhouse gases we should be getting ready for the mother of all hurricane seasons! Well not so fast. In a first time interview with Reuter’s news Colorado State University hurricane forecaster Bill Gray said he may reduce his next Atlantic season forecast because sea temperatures are cooling and a weak El Nino may appear by late summer. "Things are looking better and better for fewer storms," Gray told Reuters in an interview at the Florida Governor's Hurricane Conference in Fort Lauderdale. "Off the west African coast there's colder water. There's increasing high pressure in the Azores Islands that typically makes the trade winds stronger." How could there be colder water in this era of global warming?! Why are global temperatures falling instead of rising this decade? Does this mean that hot head Al Gore should chill out? Maybe he will have to give his Oscar back! Reuters’ says that in April, Gray's team predicted the six-month Atlantic hurricane season, which starts on June 1, would see 12 tropical storms, of which six would become hurricanes and two would reach "major" status of Category 3 or higher on the five-step Saffir-Simpson scale of hurricane intensity. The pioneering forecaster said if his research team lowers the forecast, it would likely drop to 11 storms. The new forecast is scheduled for release on June 2. The April forecast was already reduced from one issued in December, when the CSU team called for 14 tropical storms, including seven hurricanes and three major hurricanes. So does that mean the market needs to reduce its hurricane premium again? And reduce the global warming premium? Well we always have those gassy cows. The UPI is reporting that methane from cattle can be reduced by as much as 25 percent by balancing the cows diet. By trying to create the right mix of starch, cellulose, fat and other elements of feed, scientists in Canada say that they can change the way a cow does the type of things cows do every day. The UPI says that cattle account for 72 percent of Canada's methane, a powerful greenhouse gas that threatens the environment. The University of Alberta says they have developed a formula to cut methane from cattle by balancing elements found in their feed, including ash, fat and sugar. And no baked beans! Have a gas of your own! Sign up for the Phil Flynn Energy Blast! In the mean time make sure you are watching me every day on the Fox Business Network! And make sure you are getting the daily Energy Report! Just call for intraday trade adjustments and option recommendations. Call me at 800-935-6487 or email me at pflynn@alaron.com to open your account! We're long June crude oil from apprx 5700 - raise stop to 4850. We're long June heating oil from apprx 14700 - stop 13900. Buy June RBOB at 15000 - stop 14200. Buy June natural gas at 390 - stop 330. Have a GREAT day!
Phil Flynn
Alaron Research Team
800.935.6487
pflynn@alaron.com Open an account with Phil Flynn Today! Click Here
Sign up for intraday market updates Click here About the Author:
Phil Flynn is Vice President, Energy Analyst and General Market Analyst with Alaron Trading Corporation (www.alaron.com). Phil is one of the world’s leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil’s market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide. Most recently, Phil and his energy team were one of the first to predict that global crude oil prices would exceed $30/barrel in the year 2000, a correctly-predicted market milestone which has highlighted the economic scene in the new millennium. Through hundreds of media interviews, Phil Flynn and Alaron Trading have become familiar names in living rooms and boardrooms worldwide. The world’s print, broadcast and online media have come to rely on Phil’s accurate and animated forecasts and analysis. Media highlights include: The President of the United States, Bloomberg, ABC, CBS, NBC’s “Today Show” and “Nightly News with Tom Brokaw”, CNBC, CNN/ CNNfn, FOX’s “O’Reilly Factor”, PBS’s “The Newshour with Jim Lehrer” and “Nightly Business Report”, MSNBC’s “The News with Brian Williams”, Wall Street Journal Report, The Wall Street Journal, Business Week, Investor’s Business Daily, The New York Times, The Los Angeles Times, Chicago Tribune, Associated Press, The Toronto Globe & Mail, Houston Chronicle, Futures Magazine and National Public Radio. Phil’s daily market analysis can be viewed at www.alaron.com, the world’s leading futures Web site. He has been featured on MarketWatch.com, ino.com and FutureSource.com. Phil’s commitment to and experience in futures trading is documented in two books, The Mind of a Trader (Financial Times/Pitman,1997), and Trading Online (publisher, date), both by Alpesh B. Patel. Phil is a lifelong resident of Illinois. He attended Daley College in Chicago before beginning his career on the trading floor of the Chicago Mercantile Exchange Disclaimer:
There is a substantial risk of loss in trading futures and options.
The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. 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. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction |
