Alaron Energy Comment

CHICAGO - Dec 1/08 - SNS -- Following is the energy futures comment from Alaron Trading Corp.

OPEC has holiday wishes as well and it appears  they are wishing for higher energy prices this winter. But sometimes wishes can't come true.

That's about all that came out of the emergency OPEC meeting; futile hopes and dreams. Not to mention a little tension growing from those countries that might be overproducing their quota, oh my. Not a very happy holiday season for members of our own little energy  cartel. As prices keep falling,  tensions keep rising as Gulf State producers were demanding proof that other members of the cartel were actually complying with already agreed upon cuts in production. Sure, countries like Venezuela and Iran love to call for deep production cuts as long as it is not them that have to do the cutting. Saudi Arabia -  Yes, Ali Naimi -  and Saudi King Abdullah bin Abdul Aziz thinks that   a "fair" price for oil  is around  $75 a barrel   and that is what is  needed to continue investment  in oil. But believing it's fair and being able to do something about it are 2 entirely different matters.  You see the truth is that when oil prices are going up, members of the cartel seem to get along.  And when prices come down; well not so much. Cartel members are turning on each other and pointing fingers and realize that their credibility is being brought into question. OPEC's failure to cut production and even more importantly show a united front, seems to suggest that they are powerless to do anything to stop the drop in oil prices.

Perhaps the Saudis hope to see a big price break to scare their cheating brethren into compliance. Or it is possible that the Saudis failed to back a cut and blame OPEC over production for the inability of the cartel to stop the price drop in order to save face.  

Of course last week's stock market recovery gave hopes that the $50 area may be a place to start the bottoming process. I think we will see one  more extensive  selloff below $50 before we see the final bottom. Call me for trade ideas. Please feel free to contact me if there is anything I can do for you and to open your account. My number is 800-935-6487 or emails me at pflynn@alaron.com.

Make sure you sign up for the Fox Business Network where you can see me everyday!

We're short  January crude oil  from the double rollover from apprx 5760 -  stop  5650!

Buy January heating oil at 16000 -  stop 15650.

Buy January natural gas at 615 -  stop 570.

Have a GREAT day!

Phil Flynn

Alaron Research Team

800.563.9510

pflynn@alaron.com

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