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Chicago - The Energy Report for Thursday, March 27, 2008

The funds are back and you are gonna to be in trouble - hey la de la the funds are back. That's the way it felt for oil bears yesterday.

Oil soared in its biggest one day rally in years as the refiners responded to customer demand or lack there of. Refinery runs plummeted falling 1.6% and gasoline supplies fell as refiners saw no reason to continue to churn a more of product that less people wanted.

Yet we all know that the surge in oil was not just about inventory but really about the funds move back into commodities. Dismal economic numbers are erasing the optimism that crept into the market and caused the commodity bubble to burst.

Now the funds are back creating what will most likely be a double bubble and will rise hard as long as the economic news is bad and the weight of heavy inventories eventually overwhelms us.

Todays GDP may be the catalyst that pops us or continues to drive us higher.