Everything is beautiful in its own way. Come on now get happy because all of our troubles are behind us. Forget European defaults. That was so last week! This week we went shopping and all our cares have gone away. Risk takers exploded on the scene plowing back into the futures markets helping drive oil higher. No, it isn't like oil did not have other reasons to rally because it did, yet the magnitude of the rally was really driven by this sudden feeling that maybe, just maybe things in the global economy are not so bad after all.

There, now don't you feel better? Oil found early support from the weather down in the Gulf with a storm that now, according to the National Hurricane Center, is a tropical depression. Tropical Depression Number 2 to be exact. Add to that support from China's plan to spend 100 billion dollars on infrastructure and fears that Hurricane Alex slowed imports. Well those fears seem to be justified especially if the American Petroleum Institute supply numbers are right.

The API added more fuel to the bullish flames by reporting that US Crude supply fell by 7.26 million barrels. The API also reported that gas supply fell by 191000 barrels and distillates by 1.02 million barrels. The Department Of Energy's (DOE) Energy Information Agency (EIA) will release their report at 11 Eastern Time. I will be discussing the number on the Fox Business Website live. This will be an opportunity for all of you that have been asking to see me on Fox Business but do not have the channel yet to check it out.

Other than crude oil the big issue that the market will watch is the gasoline demand side of the equation as a sign of the health in the overall economy. Barbara Powell at Bloomberg News writes that U.S gasoline demand jumped to a five-week high as drivers filled their tanks for the July 4 holiday weekend, MasterCard Inc. said. Motorists bought an average 9.65 million barrels of fuel a day in the week ended July 2, the second-biggest payments network company said today in its SpendingPulse report. Yet despite the uptick in demand into the holiday the four-week average demand was 9.43 million barrels a day, 1.7 percent below a year earlier and the third consecutive decline in that average. Year-to-date demand is up 0.6 percent from 2009 which really is not the type of demand growth that you see in a normal healthy economy.

The other number to watch today is for natural gas. The natural gas storage report comes out at its normal time with a smaller than average 73bcf build expected. Still natural gas pulled back as one storm down in the Gulf dissipated. Despite the miraculous recovery in oil, the market still has a lot to prove before we can get overly bullish. As I pointed out yesterday even the most bullish analysts are starting to turn bearish which was a sign that we perhaps hands fallen to far too fast. While I welcome them to the bear side of the market, this Prozac deprived global erratic market means that we will see volatility once again increase.

Beware of short options that are not covered as they will most likely become extremely risky unless you are deep out of the money. We think this shot of euphoria will end badly yet while you on a high you might as well enjoy the ride. The dollar is looking weak and the stressed out euro looks to rebound on hopes for good results from the Euro stress tests. This means big daily ranges for oil and products and other commodities as well. Make sure you get signed up for a trial of my daily buy and sell points for all major markets. Just call me at 800-935-6487 or email me at pflynn@pfgbest.com to open your account.  And make sure you are watching the Fox Business Network where you can see me every day!

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