May 22, 2007

The Energy Report for Tuesday, May 22, 2007

Tuesday, May 22, 2007 14:25 GMT
Daily Report
By Phil Flynn
Alaron Energies

It seems like the first time in a long time that gasoline was the main feature of the energy complex. Somehow the crude oil stole center stage by staging a pretty substantial rally. Oh sure you could say the reason was the market was anticipating a big jump in refinery runs to produce more gasoline but it might have had a bit more to do with a new round of threats to Nigerian oil production by Nigerian rebels. But whatever the cause, the front moth crude oil closed back above $66.00.

The market seemed to garner support from the fact that three Indian workers in Nigeria were kidnapped over the weekend. Normally the Movement for the Emancipation of the Niger Delta (MEND) would have been suspected of this action but they were quick to deny responsibility. That s not surprising because MEND has a bit of pride and only takes credit for their own kidnappings. In fact I am getting a sense that MEND feels that using kidnapping to gain their goals is so last week it isn¡¯t even funny. A spokesman for MEND told Dow Jones News that MEND will, however, resume attacks soon on Nigerian crude oil pipelines

saying they wish to concentrate on blowing them up. It's nice to know that MEND can stay focused when they have to.

The Nigeria problems are also about gasoline. US imports are low due to the fact that Europe can't get their hands on enough sweet crude. Still the market is trying to be hopeful about gasoline thinking that increased refinery runs and increased imports will lead to a second straight week of gasoline supply increases. That may be true for this week but what about next week? With a run of refinery outages and gas going up on the rack it's unlikely that gasoline will see a rise next week. That¡¯s why it¡¯s imperative that we see a rise in supply this week.

I would be remiss not to mention that according to the Department of Energy gasoline retail price hit a record high. The national average according to the DOE is a scorching hot $3.26 a gallon. The report basically confirms what the Lundberg Survey told us a day earlier.

And as our government wastes its time investigating the oil companies for rising prices, the real war of oil and energy continues.

While our politicians make high and mighty statements about going after big oil and their profits, our nations energy supply becomes less and less secure. Instead of focusing on big oil the politicians should be focused on Russia and their push to further nationalize their oil industry so that they can use their new found energy power as an increasingly dangerous political weapon. Take for example the latest outrage in the Russian oil Industry as reported in today's Financial Times.

The Times reports that for the second time in a matter of months Moscow has threatened to revoke a BP license to develop a gas field. Moscow ratcheted up pressure on BP¡¯s Russian venture, warning that TNK-BP could see the license for its vast Kovykta gas field revoked within "a matter of days".

The FT goes on to say that, "Oleg Mitvol, head of Russia's environmental watchdog, said his agency would tomorrow open up an additional probe into whether TNK-BP was meeting license terms to develop the east Siberian Kovykta field as a three month deadline passed for TNK-BP to boost production at Kovykta to 9 billion cubic meters in line with requirements. TNK-BP has said that this would be impossible to meet."

Mr. Mitvol helped the Russian government take over the last BP venture with Russia and said, "If everything goes according to the law then TNK-BP should lose its license." And Russia of course will have more clout when the natural gas cartel - like the cartel OPEC is with oil - is then formed. I think I just felt a cold breeze blow over Europe.

Is Iran forming an alliance with al-Qaeda? A report from the Guardian UK Paper says that, "Iran is secretly forging ties with al-Qaeda elements and Sunni Arab militias in Iraq in preparation for a summer showdown with coalition forces intended to tip a wavering US Congress into voting for a full military withdrawal, US Officials say." The Guardian says that, "Iran is fighting a proxy war in Iraq and it's a very dangerous course for them to be following. They are already committing daily acts of war against US and British forces." This is a direct quote from a senior US Official.

Now with Iran fighting a proxy war in Iraq and the ongoing tensions in Lebanon, the risk is high that we will see the prices of oil build in more risk premium as we go forward. It looks like it's going to be a long hot summer. Get ready to be refreshed though by signing up for your free trial of just call Phil Flynn at 800-935-6487 or email me at to open your account.

We're long July crude oil from apprx 6412 - raise stop to 6530!!

We're long July RBOB from apprx 22387 - leave stop at 22700!!!

Buy July heating oil at 19000 - stop 18800.

We're long July natural gas from apprx 802 - leave stop at 795.

Have a GREAT day!

Who is Phil Flynn?
Phil Flynn, Vice President, Energy and General Market Analyst with Alaron Futures and Options (, is one of the world's leading energy market analysts. Phil heads the Alaron Energies Futures Brokerage Division offering brokerage services to individual investors, professional traders and institutions. Phil provides 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.

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 that has highlighted the economic scene in the new millennium. Phil also called the rise of retail gas prices in 2001. Most recently, Phil Flynn has again accurately predicted that global crude oil prices would reach close to $40/barrel ($39.99/barrel) in 2004. Through hundreds of media interviews, Phil Flynn and Alaron Futures and Options have become familiar names in living rooms and boardrooms worldwide. The world's print, broadcast, online media and small businesses have come to rely on Phil's accurate and animated forecasts, analysis, speculative and hedging opportunities.

Alaron Energies
Phone: 1-800-937-6487

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1 comment:

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