Alaron Energy Comment

CHICAGO - Aug 25/08 - SNS -- Following is the energy futures comment from Alaron Trading Corp.

Big Bad Ben Bernanke helps  break the oil back and signals a potential big time failure looming for energy bulls. Magic words from the Fed Chairman sent oil futures tumbling on Friday as it seems the energy complex is more apt to ignore weather and geo-political events in favor of words from the Fed Central Bank Chairman. And there's talk  a Korean Bank may buy Lehman Brothers.

It is obvious that oil is focusing on things much more complex than simple supply and demand and is  looking on the larger issue on the  state of the economy. The market is being driven by the dollar and central bank policy and  issues like war and supply/demand take a back seat. The largest moves in oil seem to come on macroeconomic stories as opposed to stories about supply and demand. The fate of the economy and the fortunes of dollar seem to have more of an effect. Thursday's sharp historic gains seemed to be erased in a blink of an eye. Ben Bernanke said that the fall in oil prices and the rally in the dollar were encouraging but what seemed even more encouraging is  the perception of just a little less risk on the investment banking side. Yet still we see other banks fall like flies.

Bloomberg News says that Columbian Bank and Trust Co. of Topeka, Kansas, was closed by U.S. regulators. This is the nation's ninth bank to collapse this year amid bad real-estate loans and writedowns stemming from a drop in home prices. The bank, with $752 million in assets and $622 million in total deposits, was shuttered by the Kansas state bank commissioner's office and the Federal Deposit Insurance Corp, the FDIC said yesterday in a statement. Citizens Bank and Trust will assume the failed bank's insured deposits. Columbian Bank's nine branches will open Aug. 25 as Citizens Bank and Trust offices, the FDIC said. Customers could access their accounts over the weekend by writing checks or using ATM or debit cards. ``There is no need for customers to change their banking relationship to retain their deposit insurance coverage,'' the FDIC said.

Fay may have finally gone away after a record four strikes on land but another disturbance is right behind it. Could Gustav be a new worry? The National Hurricane Center is warning that a tropical wave over the southeastern Caribbean Sea could turn into tropical storm Gustav. The National Hurricane Center says that this tropical wave continues to produce a large area of disorganized showers and thunderstorms and it could become a tropical depression. And what is more there is another disturbance as well but at this time does not to appear to be as big a threat. The NHC says that that tropical wave located about 525 miles East-Northeast of the Leeward Islands is less conducive but some slow development of this disturbance is still possible during the next couple of days.    

More on Georgia. Dow Jones news wires report that French President Nicolas Sarkozy, whose country holds the rotating presidency of the European Union, will convene a special European summit on the crisis in Georgia on September 1.  Sarkozy called the summit on the future of relations between the E.U. and Russia and on aid to Georgia at the request of various European countries. French Foreign Minister Bernard Kouchner had warned this week that Sarkozy might convene an emergency E.U. meeting on the Georgia crisis if Russia failed to pull back its forces from positions in the ex-Soviet republic.

Also adding to tensions, Russian parliament voted on a non-binding resolution to recognize Georgia's breakaway regions of South Ossetia and Abkhazia independence. Also as AFP reported, over the weekend a train carrying fuel exploded Sunday near the Georgian city of Gori after hitting a mine on the railway that then  blocked a vital east-west transportation link. Georgia's economic development minister charged that Russian forces had a hand in the blast, saying Moscow wanted to disrupt the energy corridor from the Caspian Sea to Europe that bypasses Russian territory.  "Georgia provides an alternative corridor for exporting oil and gas that is not controlled by Russia," said Economic Development Minister Ekaterina Sharashidze.  He said,  "Russia tried everything possible to make sure this corridor does not exist anymore."  An intense fire was burning, sending plumes of thick dark smoke into the air that could be seen from kilometers around, according to an AFP correspondent.  "A train carrying fuel exploded," interior ministry spokesman Shota Utiashvili said. "The railway was mined and that was the reason for the explosion."  The blast occurred in a rural valley just outside the village of Skra, about five kilometers (three miles) west of Gori.   The governor of the surrounding Shida Kartli region, Lado Vardzelashvili, said the train was traveling near a military base occupied by Russian troops until Friday and the explosion had caused no casualties.  Omar Yuramashvili, a shepherd who saw the blast, told AFP the train had been traveling west from Gori.  "When it went off it was the loudest explosion I've ever heard. The force was so great that some of the wagons were forced off the tracks," he told AFP.  Five fire engines were battling to control the blaze, which had also started small bush fires in the vicinity.  One of the wagons was marked Azpetrol, the name of a company based in Baku, Azerbaijan.  Sharashidze said traffic had stopped along the line, which is used to transport fuel from Azerbaijan to the Georgian port city of Batumi, and those officials were determining the extent of the damage.  Georgia had previously accused Russian forces of blowing up a rail bridge near the town of Kaspi. Sharashidze said the bridge would be repaired in about three weeks and that an alternative bridge was being used in the meantime.

See me today on the Fox Business Network and  sign up for your free trial of Alaronenergies!  And you can get  blasted with the Phil Flynn Energy Blast! Just call me at 800-935-6487 or email me at pflynn@alaron.com to open your account.  A word on trade recommendations. In the past we have tried to make recommendations for small to medium size accounts with tight stops. The trade recommendations were just guides and meant as part of a long term system for smaller accounts. In the real world with larger accounts we might use larger stops or hedge our positions with options. We have the disadvantage  of only putting out trades once a day to keep things simple for the readers.  We are being forced by market conditions to take larger risks and we may be forced to stop focusing on small to medium size accounts. To trade these markets with a small  or medium size account, you may need to trade with  much different strategies than  position and hold.   Obviously the risk on some of these trades is not appropriate for everyone so  contact me if you need  help. We also use options and profit objectives along the way and the only way to get that is to call me at 800-9356487 or to email at pflynn@alaron.com.

We're long  October crude from apprx 11740 -  stop 11180.

We're short October heating oil from  apprx 33500 - lower stop to 32300!

Sell October RBOB at 29500 -  stop 30000.

We're long  October natural gas from  apprx 800 - stop 730.

Have a GREAT day!  

Phil Flynn

Alaron Research Team

800.563.9510

pflynn@alaron.com

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