Looking for some Energy Balance

 @ibtimes
on February 20 2009 8:54 AM

Maybe all things are not green with the energy proposals of the Obama Administration. According to sources, the Obama administration is exploring the possibility of starting a Strategic Products Reserve. What is a Strategic Product Reserve? Well unlike the Strategic Petroleum Reserve this reserve would have refiners stock extra supplies of gasoline and heating oil. Our nation's first Strategic Petroleum Reserve was created in response to the Arab oil embargo as a way of protecting the country against the threat of supplies of oil is cut off from an unfriendly foe. Of course over the years uses for the reserve have expanded and it has been used in response to natural disasters. This year it became apparent that having a lot of unrefined oil was a good thing but not necessarily if the refiners were shut down and they couldn't refine it. If a major hurricane went through refinery row, it wouldn't be a lack of oil that would be the problem but a lack of products.

I have openly called for a reserve of products and I applaud the Obama administration for looking at the possibility. There is going to bemany considerations such as cost etc. but when you are spending billions of dollars gambling on green energy projects that may or may not work or become economical, I am glad the administration is doing something that is realistic, attainable and the most cost effective way to improve our nation's energy security. Plans are in the very early stages but we will keep you up to date.

Oil went crazy. A major short covering rally on a weak dollar and a surprise draw in crude stocks. Gas demand is coming back but so too are the refiners. Yet the market is probably over reacting. On the geo-political front the Financial Times is reporting that Iran has built up a stockpile of enough enriched uranium for one nuclear bomb as quoted by United Nations officials. The Times says that this development comes as the Obama administration is drawing up its policy on negotiations with Tehran over its nuclear program. UN officials said Iran had produced more nuclear material than previously thought. Way to go UN. Great job!

We have been short crude oil on a quintuple rollover! Wow. All great trades must come to an end and yesterday we were stopped. Stopped on short April crude from apprx 3854 at apprx 3960. I am glad so many of you caught some of that great bear ride! Thanks for all your emails and calls! It was an awesome run! Now on to the next great trade!

Sell April crude oil at  4160 - stop 4330.  

We're short March heating oil from apprx 14000 - lower stop to 13600!!!

Sell April RBOB at 12700 - stop 13300.

Sell April natural gas at 500 - stop 540.

The Dan Flynn Corn & Ethanol Report

Good Morning !

In last nights action the March Corn settled on the low at 350 doen 3 1/4 cents.

The range was 354 3/4 to 350. Weather in South America continues to brace this market.

Maybe the build in exports could possibly put a bottom in this market.

Crude Oil tested $40 a barrell only to fail again and not sustain a rally.

I remain bearish on Energies. Have a Great Friday !

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