The Energy Report

Coming To America!

Phil Flynn — 2010-07-29T14:54:00Z

The Energy Report Thursday July 29, 2010

Coming To America!

Everywhere from around the world, the crudes coming to America, every time that flag’s unfurled
crude is coming to America, got a dream to take it there, it’s coming to America. It’s coming to America and coming to America! Give me your poor, your huddles masses but most of all give me your crude. Crude Imports surged hitting the highest level since August of 2006 leading to a whopper 7.3 million barrel build in US Crude supply. This was a far cry from most analysts’ expectations that were looking for a big drop in supply by thinking that Tropical Storm Bonnie would impact imports in a negative fashion. I on the other hand did predict a build because as I believed that the storm might have the opposite reaction on Imports and it looks like I was right. In fact according to one report we saw from “Gas Oil and Liquids Daily” supplies in Gulf States jumped a whopping 8.18 million barrels, or 4.6%, to 184.6 million. Regional imports gained 1.73 million bpd, or 32%, to a record 7.21 million. The gain was the largest since Gulf traffic resumed after being slowed by hurricanes Gustav and Ike in 2008. The reason that we saw that big jump in the Gulf Coast may have more to do with the aftermath Hurricane Alex and the way the Energy Information Agency collects data then with Tropical Storm Bonnie. Crude Imports slowed and got backed up. After Alex passed that Crude that waiting out the storm rushed into port ahead of what turned out to be Tropical Storm Bonnie. The EIA sometimes seem to be slow in acquiring import data especially when many are focused on storm events. So it is very likely some of the crude imports that they counted coming into the Gulf from last week’s report missed the data deadline and ended up getting counted in this week’s report. While this was very bearish there were some signs on the product demand side that kept the complex from getting totally crushed. The Energy Information Agency Reported that total products supplied over the last four-week period has averaged 19.4 million barrels per day which was up by 3.4 percent compared to the similar period last year. The EIA said that over the last four weeks, motor gasoline demand has averaged 9.4 million barrels per day, up by 2.1 percent from the same period last year. Distillate fuel demand has averaged 3.6 million barrels per day over the last four weeks, up by 9.3 percent from the same period last year. Jet fuel demand is 11.2 percent higher over the last four weeks compared to the same four-week period last year. Is it time to buy algae stocks? Maybe pond scum is not necessarily a bad thing. The Energy Information Agency makes me think we are getting close as they did a report looking into the attributes of algae that could make algae a potentially attractive renewable fuel that could someday replace oil. You see in that smelly gross algae stuff is natural oil that can be used for energy. You see algae converts light, carbon dioxide (CO₂), water, and nutrients such as nitrogen and phosphorus into oxygen and biomass, including lipids – the generic name for the primary storage form of natural oils. The EIA says that single-cell or microalgae are most interesting because of the speed and efficiency at which they produce lipids. In fact algae can produce these amazing lipids faster per acre of harvested land than terrestrial plants because of their high lipid content and rapid growth rates. In fact according to the National Renewable Energy Laboratory (NREL) estimates that the oil yield for a moderately productive algal species could be about 1,200 gallons per acre; compared to 48 gallons per acre for soybeans. On top of that high productivity of algae could significantly reduce the land use associated with production of biofuels. In other words, it would take 62.5 million acres of soybeans (an area approximately the size of Wyoming) to produce the same 3 billion gallons of oil that could be produced from only 2.5 million acres of algae (an area approximately 70 percent the size of Connecticut). Three billion gallons of biodiesel represent about 8 percent of all the diesel fuel used for on-road transportation in the United States in 2008. This could also end the food or fuel debate that erupted when ethanol demand drove up grain prices. Yet there are still some problems and there are those pesky technological and economic challenges in algae cultivation, harvesting, and oil extraction that have to be addressed before algae-based fuels can be commercially produced”. The EIA says that among other things scalability remains a major obstacle. Harvesting and oil extraction are relatively costly. Currently, most estimates of the production cost of algal oil range from $4-$40 per gallon depending on the type of cultivation system used. Are you wondering why it is so hot? Well maybe it is global warming. The latest report from the US National Oceanic and Atmospheric Administration says that Climate change or global warming is an undeniable fact and there are clear signs of those nasty “human fingerprints” all over it. So that is why you are sweating. Another theory could be that it’s summer. Tony Heyward may be banished to Siberia while Conoco Philips is getting out. Conoco say it is selling its entire stake in Russia’s Lukoil. The FT reports that Conoco CEO Jim Mulva said that the Lukoil investment had been aimed at doing joint deals and these had not happened. Or it may be because he wants to stay as far away from Tony Heyward as he can. Do not stay too far away from the markets> Make sure you are getting my trial of daily buy and sell points on all of the major markets as well as my daily energy report! Also make sure you are getting the Fox Business Network.. Just call me at 800-935-6487 or email me at pflynn@pfgbest.com

There is a substantial risk of loss in trading futures and options.Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Fundamentally Flawed

Phil Flynn — 2010-07-28T14:54:00Z

The Energy Report Wednesday, July 28, 2010

Fundamentally Flawed

Another failed upside breakout as the global oil market continues to wallow in this endless trading range. As the bull and bear frustrations continue to mount, I have heard traders on both sides of the market that tell me that somehow the markets are wrong and that the fundamentals do not justify the current price. In other words that the market is somehow fundamentally flawed and that the price is out of whack with either your bullish or perhaps bearish reality. Oil bulls are frustrated with the lack of investment that they see in the oil industry and feel we are over estimating the drop in demand. They point to China and its explosive growth and its growing appetite for oil. They say that the market is not correctly accessing event risk especially with the type of talk coming out of Iran and Israel in recent days especially in the aftermath of European sanctions. The oil bulls say that despite the drop in demand that as the economy continues to recover oil supplies will tighten faster than you think. The latest to express that frustration was noted oil bulls Goldman Sachs who just recently exclaimed that crude oil prices are “significantly” below the level warranted by fundamentals. Goldman Sachs Group analyst David Greely complained that the balance between supply and demand in oil will continue to tighten in the second half of this year as global economic growth may boost demand, returning inventories to “more normal” levels toward the end of the year. Of course that came as Goldman had to reduce its near-term price forecast to the lower end of its targeted $85-$95 because of what they say is “still-fragile” sentiment in the marketplace. Oil Bears will counter that oil is artificially high as evidenced by the global glut of oil that permeates the market place. Not to mention a global glut of spare production capacity and a global glut of spare refining capacity as well. Take recent data from the International Energy Agency that supports this bearish view. The IEA reported that oil stocks in OECD countries increased again in May across all regions and by a combined 35.0 million barrels hitting 2 757 million barrels or a whopping 61.0 days of forward demand cover. The IEA say s that it expects to see further increases in supplies in their next report. Yet on the demand side their growth expectations are very modest. The IEA say that global oil demand is only expected to increase by a very small 1.6% next year or a paltry 1.3 Million barrels. This is a far cry from the type of demand that would seem to support higher prices going forward. So who is right? Is the price of oil fundamentally underpriced or overpriced. Well the truth is that the question is fundamentally flawed. The price of oil is always fundamentally correct assuming that you are focused on the correct fundamental. Oil and its price may not reflect as clearly the supply and demand fundamentals of the past because the price has been influenced or some might say manipulated by global central banks as they struggle to react to this global economic crisis. The price of oil is being influence not just by what is happening now but by what may happen in the future. If the economy gets better then the market feels that this will be inflationary according to oil bulls. Bears warn that if the economy gets too good stimulus will have to be removed thereby breaking the price of oil. In fact it is this type of debate and trading that keeps oil range bound. The truth is that the market is pricing in both sides of this outlook and doing it well and that is why we are going nowhere. When the fundamentals seem to be wrong it is probably because you are not doing your homework. Or because the market itself is trying to hear both sides and adjudicate the eventually outcome...And now the fundamentals are being driven by both bearish and bearish forces and that is the reason we are seeing one of the biggest sideways markets in decades. I am on record as saying that that I belive that eventually we will break out lower but in the meantime do not fight the fundamentals. Trade the ranges. And a great way to do that is to get my daily buy and sell points on all the major commodities markets while you still can. Just call me at 800-935-6487 or email me at pflynn@pfgbest.com And as always make sure you are tuning into the Fox Business Network!

All The News That Is Fit To Ignore

Phil Flynn — 2010-07-27T14:54:00Z

The Energy Report Tuesday July 27, 2010

All The News that is fit to Ignore. Gee I miss the old days when a headline or two would get the oil screaming. When the markets feared that even the loss of just one drop of oil could knock the world out of its delicate supply versus demand balance. You remember those days not to long ago when the market soared on even the most mundane headline. Instead what we have now a lack of passion and that oh so boring market stability. Oh sure oil may try to reluctantly breakout to the upside as it follows the stock-market on its earnings fueled optimistic rally yet deep down it really does not want too. You see the oil glut the likes of which we haven’t experienced in decades is leading to a drab oil market and heavens forbid less interesting Energy Reports, Oh No! So let’s pretend if only for today that these stories that used to drive markets wild actually still matter to price. Like for example say sanctions on Iran. Something like, oil traders ran for cover as the long awaited sanctions on a still defiant Iran took hold. (Ok well everything is true except for the running for cover part) Iran’s President Mahmoud Ahmadinejad warned that sanctions imposed by arrogant Western powers will not slow their nuclear ambitions. (Yikes!) The European Union adopted new sanctions targeting Iran's foreign trade, banking and energy sectors brought sharp criticism from Russia’s Foreign Ministry. Russia that previously scolded Iran for its lack of cooperation with the world over its nuclear program now says that according to the AP that the new EU sanctions against Iran show scorn for the United Nations and the so-called "sextet" working to resolve disputes over Iran's nuclear program. Russian Foreign Ministry spokesman Andrei Nesterenko said Tuesday the move "not only undermines our joint strength in the search for a political-diplomatic resolution of the situation around Iran's nuclear program but demonstrates scorn for the carefully developed and agreed-upon position of the U.N. Security Council resolution." Iran of course has threatened to lash out in the past if sanctions are imposed now has the oil market yawning. Dam that spare production capacity. Venezuela shocked the oil market threatening to cut off the US from oil supply. Oh all right the market was not shocked because Hugo Chavez always is shooting his big mouth off. So once again the oil market yawned again while the “Big Mouth down South” threatened to cut off oil supplies to the United States If Columbia attacks Venezuela. Hugo Chavez made this threat because Colombia says that Venezuela is supporting and granting save haven to Colombian rebels. Hugo in his paranoia claims that this is a charge cooked up somehow by the United States. Who knows, maybe it a dastardly plan even being perpetrated by George Bush and Dick Cheney? If you don't belive him just ask a Columbian rebel if you can find one. Try looking in Caracas. Then of course because of our oil consuming ways we have this great transfer of wealth going to countries that do not like us very much. Like Canada! Canada is the number one energy provider to the US. Look at all those rich Canadians driving around in their fancy all terrain vehicles and flaunting their free health care and their hockey gold medal at us while they are paying for it with all of that US energy consuming dollars. Is there any wonder why need to reduce our foreign energy dependence for heaven sakes! Make sure that you are not getting shortchanged by tuning into the Fox Business Network! Also make sure you get a trail of my daily buy and sell points on all the major markets. Just call me at 800-935-6487 or email me at pflynn@pfgbest.com

Bye, Bye, Bonnie

Phil Flynn — 2010-07-26T14:54:00Z

The Energy Report Monday, July 26, 2010

With Bonnie behind us and more economic ahead of us the oil market currently is in a state of flux. The market continues to be supported by economic earnings related optimism but at the same time it has to worry about current state of oversupply. Oil and the products remain range bound and will continue to see swings perhaps on both sides of unchanged throughout the day. When the big news of the day is whether or not Tony Heyward will step down or be pushed out of BP has to wonder whether or not the markets are focused on what it should be focused on. The Financial Times reports on another way that Shale Gas production is impacting the world. The FT says that “International energy groups are set to miss out on billions of dollars of future sales during the next decade as China, their most voracious customer, aggressively develops its own large gas reserves and drastically cuts its imported gas requirements, a new study shows. As a result they have a limited window to export their growing new volumes of gas to China. Industry consultant Wood Mackenzie says China will need only half as much more liquefied natural gas from 2020 onwards than it will require in the next decade and it will need no additional gas transported by pipeline after 2020. “Beyond 2020 we expect to see significant volumes of indigenous unconventional gas entering the market and meeting much of China’s incremental demand,” the report states. Chinese coal gasification, coal bed methane and particularly shale gas are expected to supply more than 12bn cu ft per day by 2030, cutting the country’s need for new tanker-delivered LNG to 8m tonnes a year from 2020, against 16m annually during the next decade. For international oil and gas companies looking to grow their LNG business, the emergence of Chinese shale gas will be particularly difficult. China also has large conventional gas resources. Since 2005 the country has become gas companies’ most important market as the US has closed its doors to imports because of its own giant shale reserves, and Europe’s gas use has begun to stagnate.” A must read in the FT. China is unhappy with the green back again. Market Watch Reports That a top Chinese central bank official suggested switching away from the U.S. dollar as a benchmark for the yuan's foreign-exchange rate, switching instead to a basket of currencies, according to remarks published Thursday Market Watch reports that in comments posted to the People's Bank of China Web site, the central bank's Deputy Gov. Hu Xiaolian said using a basket of currencies from the nation's top trading partners would allow the Chinese yuan to better reflect trading fundamentals. "Compared with pegging to a single currency, the exchange-rate regime with reference to a basket of currencies will help adjust exports and imports, current account, and balance of payment in a more effective manner," she said. China's central bank currently sets a "central parity rate" against the U.S. dollar each day, with that day's trading range confined to 0.5% above or below that level. But Hu said focusing on the dollar-yuan rate ignored China's bigger trade picture. "A floating exchange rate has impact on total imports and exports of an economy," she said. "Therefore, the floating cannot be aimed to adjust [only the] bilateral trade balance, and it is not advisable to just look at the [dollar-yuan] exchange rate”. Make sure you are getting all the latest trade updates by calling for my daily trade signals and at the same time make sure you are on the daily energy blast. Also check me out on the Fox Business Network.

My Bonnie

Phil Flynn — 2010-07-23T14:54:00Z

The Energy Report for Friday, July 23, 2010

My Bonnie.

All right readers, you knew this was coming. My Bonnie lies over the ocean. My Bonnie will make rig workers flee. My Bonnie will slow gulf operations, and bring oil bears to their knees. Sorry about that but I just had to do it. Batten down the hatches! Oil is getting blown out of its recent trading range hitting a three month high. With tropical storm Bonnie lying over the ocean and good earnings supporting the stock market, commodities markets are zest and full of life. Of course Dave Tolleris at Weather Risk seems to think that the storm, “won't be that big of a deal” the market was helped along by this storm track. The reason is that according to the National Hurricane Center this is a storm that could be heading right into the east end of refinery row where 43% of our nations refining capacity is located, not to mention of course the Gulf also is home to 11% of the nations natural gas production and near 30% of total oil production. The Gulf of Mexico is also the nation’s largest oil import terminal. Possible flooding and slowed imports and some worse case scenarios helped shorts in the marketplace start to cover. But if the storm does little damage, the market place can take comfort in the fact that petroleum inventories are in better shape than they have been in the past to weather the storm. With supply near 20 year highs the market may realize that this storm may not really have a lasting impact on price. The other impact of the storm is that efforts by BP to cap the oil leak will be put on hold. Reuter’s News reports that officials leading the effort said many of the vessels and rigs involved in the operation would prepare to move out of the system's path. "While these actions might delay the effort to kill the well for several days, the safety of the individuals at the well site is our highest concern," retired Coast Guard Admiral Thad Allan. To give the storm all the credit for the market performance would not be fair. The resurgent euro, strong data out of Germany and great earnings and another dramatic mood shift in the marketplace helped drive stocks and commodities. The bulls are back as Euro Bank stress tests seem to be a success at least in the mind of traders. Technically we can move higher and test the old highs but the rally will be dependent on a good market mood and no bad economic news. Well speaking of plugs could an electric car be in your future? U.S. Senator Byron Dorgan wants you to know that his legislation to promote the deployment of plug-in electric drive motor vehicles was approved by, “an overwhelming bipartisan majority in the U.S. Senate Energy and Natural Resources Committee.” Senator Dorgan calls his the “Promoting Electric Vehicle Act of 2010” and says it would extend and expand national incentives to accelerate the introduction of electric cars and trucks throughout the country which he says will significantly reduce gas consumption and create more jobs here at home. Senator Dorgan says it is his goal to put the nation on a path to electrify half its cars and trucks by 2030. Senator Dorgan estimates if he can do that the U.S. demand for oil by about one-third. Now of course I know that sounds good on the surface but has the government done a good job promoting electric cars? Well maybe too good in at least one case. John Stossel of The Fox Business network reported back in December 2009 that after money from the "stimulus" bill was spent on destroying perfectly good cars and building an Airport for Nobody, the WSJ reports that government has found an even more ridiculous way to spend your money: free golf carts. "The purchase of some models could be absolutely free," Roger Gaddis of Ada Electric Cars in Oklahoma said earlier this year. "Is that about the coolest thing you've ever heard?" The golf-cart boom follows an IRS ruling that many golf carts qualify for the electric-car credit. Tony Colangelo, in Florida, calls himself "golf cart man" and is already advertising free carts. Golf Cart Man is referring to his offer in which you can buy the cart for $8,000, get a $5,300 tax credit off your 2009 income tax, lease it back for $100 a month for 27 months, at which point Golf Cart Man will buy back the cart for $2,000. "This means you own a free Golf Cart or make $2,000 cash doing absolutely nothing!!!" Stossel goes on to say, “I thought this giveaway was outrageous enough that it would embarrass Congress into killing the tax credit. I thought the media would be all over Colangelo, after the WSJ story. I was wrong. When we called him, he said, “I’ve never had so many phone calls,” But most of the calls come from potential golf-cart “buyers.” Colangelo said he had received some e-mails from newspapers, but my researcher was the first reporter with whom he’d spoken. He also said the golf-cart credit is a very good thing. Good for the politicians: It’s all [about] going green. They want all those gas vehicles off the street. They’d rather have the electric than anything. But is going electric really going green? What about the money you will have to spend to fix the power grid? What about the money it will take to build more infrastructures. What about the rare earth metals it will take to make all of these batteries and what will we do with all the batteries once their usefulness is spent? Martin Lamonica of CNET writes that, “The environmental benefits of electric cars are being questioned in Germany by a surprising actor: the green movement. But those risks don't apply in the U.S., the American electric-car lobby asserts. The German branch of the environmental group World Wildlife Foundation (WWF) has conducted a study together with IZES a German institute for future energy systems, on the environmental impact of electric vehicles in Germany. “Just like the U.S., Germany has an ambitious goal of introducing electric vehicles. Germany, which today has 41 million cars, aims to have 1 million electric cars or plug-in hybrid vehicles on the road by 2020. The conclusion of the study is that these electric cars only reduce greenhouse gases marginally. The study, which was published in German in March, has not been widely circulated in English. The WWF Germany said a summary in English is set for publication this summer. "What surprised us was that the carbon dioxide savings were so small," Viviane Raddatz, vehicle expert at WWF Germany, said in a phone interview from Berlin. In a best-case scenario, the WWF assumes that the 1 million electric cars or plug-in vehicles would be running on renewable electricity and used at maximum mileage. Electric vehicles do not yet have the range of regular cars. The carbon dioxide emission reductions from these 1 million electrical vehicles in Germany's transportation sector would be only 1 percent, according to the study, and overall national carbon dioxide emissions would only be cut by 0.1 percent. "That is not a very big deal," Raddatz said, adding that, "it is not going to help us out of the transportation emission mess." A worst-case scenario would be that the electric cars would run on electricity from coal instead of from renewable sources.” The good new is that the government may be backing off of cap and trade. Reuters new reports that, “ Senate Democrats said on Thursday they will wait until September at the earliest to take up broad climate-change legislation, a potentially fatal blow to the White House push to curb greenhouse gases. The delay means Democrats have little time to advance the complex legislation amid intense political pressure in the weeks before November congressional elections. It also could derail global climate change initiatives, as the world's major economies and greenhouse gas emitters insist the United States play a leading role. Senate Majority Leader Harry Reid said he plans to bring up a narrower energy bill next week that would revamp offshore oil drilling rules in the wake of the BP oil spill while returning to the broader legislation sometime after senators return from their summer recess in September. "Unfortunately at this time we don't have a single Republican on board," Reid told reporters. And the truth is that Harry that you do not have the vast majority of Americans on board with this radical agenda. Wow! Thanks for the nice turn out for the webinar! “The Energy Report” readers are the best! So many of you have called and emailed and I am so pleased that to so many of you have told me that “The Energy Report” is on your must read list each day. That is a true compliment especially with all of the information out there vying for your attention and I am humbled and I thank you. If you happen to have missed the webinar, email me and I will send you a link of the replay when it becomes available. Just call me at 800-935-6487 or email me at pfynn@pfgbest.com to open your account. Fox Business is on the story, make sure you are tuned in to get a true insight and value to the world and the markets. Not to mention that you can also see me there each day! Have an awesome weekend and make sure you are signed up for my daily buy and sell points!

Ben What A Bummer!

Phil Flynn — 2010-07-22T14:54:00Z

The Energy Report for Thursday, July 22, 2010

Bummer Bernanke

Ben what a bummer! Way to bring us all down Ben. Dude, we were feeling happy in this little bubble world of earnings driven economic expectations and you go and have to ruin our little economic recovery fantasy world bliss. Why did you have to tell us the truth man and ruin the buzz? That you and most of your friends at the Fed saw the risks to growth as weighted to the downside. Why tell us that the economic expansion is only proceeding at a moderate pace and only because it is being supported by stimulative monetary and fiscal policies. We may be high but to some it felt like we were doing it on our own. Why tell us that the housing market remains weak, with the overhang of vacant or foreclosed houses weighing on home prices and construction? And on top of that, you remind us that this is an important drag on household spending. Then you have to bring up that darn slow recovery in the labor market and the attendant uncertainty about job prospects. Did you have to go and say that after two years of job losses, private payrolls expanded at an average of about 100,000 per month during the first half of this year, a pace insufficient to reduce the unemployment rate materially? Or that in all likelihood it is going to take a significant amount of time to restore the nearly 8-1/2 million jobs that were lost over 2008 and 2009. Or tell us that nearly half of the unemployed have been out of work for longer than six months. Or say that long-term unemployment not only imposes exceptional near-term hardships on workers and their families, it also erodes skills and may have long-lasting effects on workers’ employment and earnings prospects. Man, you had better do something to get us feeling better or at least send us into oblivion again. I mean even talking about the potential for more stimulation later if we get feeling really bad does little to bring back my buzz today. And even the talk of more stimulus has many wondering that if things are still so weak then why should we make a commitment to expand our business? Because Ben as you said yesterday, many banks continue to have a large volume of troubled loans on their books, and bank lending standards remain tight. With credit demand weak and with banks writing down problem credits, bank loans outstanding have continued to contract. Small businesses, which depend importantly on bank credit, have been particularly hard hit. Not to mention what this downer kind of talk can do to oil demand expectations. This less than bright outlook by the Fed Chairman once again can get the oil market to focus on over supply. Not even the storm threat down in the Gulf at this point seems to be taking our mind off of that glut. Oh sure, we downgraded the storm threat expectations but it is already having some impact on BP clean up operations. The National Hurricane Center now says we have two tropical waves down south, one that is in the Gulf of Mexico and one that is headed that way. At this point they both have a 40% chance of becoming a tropical cyclone. The weak economic conditions are one reason we saw a bearish Energy Information Agency report. The most bearish aspect was the out of season distillate fuel inventories that increased by 3.9 million barrels. Distillate fuel demand has averaged 3.6 million barrels per and while up by 9.0 percent from the depths of despair a year ago, is not nearly enough to cut into our near record amount of supply. The EIA sais that overall refinery inputs came in at 15.5 million barrels per day during the week en and that refineries operated at 91.5 percent of their operable capacity last week. Gasoline production decreased last week, averaging 9.3 million barrels per day. Distillate fuel production increased last week, averaging 4.5 million barrels per day. U.S. crude oil imports averaged 10.0 million barrels per day last week, up by 696 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 9.5 million barrels per day, 203 thousand barrels per day above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 1.2 million barrels per day. Distillate fuel imports averaged 174 thousand barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 0.4 million barrels from the previous week. At 353.5 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 1.1 million barrels last week, and are above the upper limit of the average range. The range in oil continues. We are higher then we are lower and then we are higher again. Make sure you are getting my buy and sell points for oil and all the major markets. Just call me at 800-935-6487 or email me at pflynn@pfgbest.com to open your account. Also sign up for my webinar today! And as always check out the Fox Business Network and experience business in true high definition and where you can see me every day! Why waste all of those pixels or whatever those high def things are that you paid for.

Oh No, Not Again

Phil Flynn — 2010-07-21T14:54:00Z

The Energy Report Wednesday July 21, 2010

Oh no not again. I’d like to tell you that the supply report from the American Petroleum Institute matters and that we could go back to find love and happiness continuing to scalp oil in its very defined trading range. I would even like to tell you that todays Energy Information Agency report is going to matter as well. Yet the threat to our little trading range nirvana is being threatened by another potential storm down in the Gulf of Mexico. The National Hurricane Center now shows that a tropical wave that we have been watching now has about a 70% chance to biome a hurricane and play havoc with production and imports into the Gulf of Mexico. The NHC says that “STRONG TROPICAL WAVE...LOCATED NEAR THE EASTERN DOMINICAN REPUBLIC AND EXTENDING NORTHWARD OVER THE ATLANTIC FOR A FEW HUNDRED MILES...IS PRODUCING A LARGE AREA OF SHOWERS AND THUNDERSTORMS FROM THE NORTHERN LEEWARD ISLANDS WESTWARD TO HISPANIOLA...AND OVER THE ADJACENT WATERS OF THE ATLANTIC AND NORTHEASTERN CARIBBEAN SEA. ALTHOUGH A CLOSED SURFACE CIRCULATION HAS NOT YET DEVELOPED...ENVIRONMENTAL CONDITIONS ARE EXPECTED TO BECOME MORE CONDUCIVE FORTROPICAL CYCLONE FORMATION AS THE SYSTEM MOVES WEST-NORTHWESTWARD AT ABOUT 10 MPH DURING THE NEXT DAY OR SO. THERE IS A HIGH CHANCE...70 PERCENT...OF THIS SYSTEM BECOMING A TROPICAL DEPRESSION OR A TROPICAL STORM DURING THE NEXT 48 HOURS. REGARDLESS OF DEVELOPMENT...LOCALLY HEAVY RAINFALL AND GUSTY WINDS WILL CONTINUETO AFFECT THE VIRGIN ISLANDS AND PUERTO RICO...AND LIKELY AFFECT THE DOMINICAN REPUBLIC...HAITI...EASTERN CUBA...THE TURKS AND CAICOS ISLANDS...AND THE BAHAMAS DURING THE NEXT COUPLE OF DAYS. THE HEAVY RAINS COULD CAUSE LIFE-THREATENING FLASH FLOODS AND MUD SLIDES IN MOUNTAINOUS AREAS.”

So there is a possibility that oil and other petroleum products may put in some hurricane premium. The Natural gas seems less worried as on shore production is rising and supplies are ample. Yet we cannot be complacent. The API showed less than exciting numbers showing crude down 241,000 barrels gas down 412,000 barrels and distillates rising by 241000 barrels. Of Course oil may also take its cue from Big Ben and no that is not the name of a hurricane but our name trusty Fed Chairman Ben Bernanke. Because oil has had a tendency to live and die with the fortunes of the stock market his words may inspire us. Of course the focus may be on the report that a few Fed Banks were pushed for a discount rate increase in an attempt to get credit flowing from banks too scared to lend money. If Ben says that he is considering this oil and stocks should get a quick boost.

Despite the storm threat we still feel oil will be locked in the twilight zone. Not really bearish and not really bullish. Call me for the best way to trade it and get sign up for a trail of my daily numbers. Jut call me at 800-935-6487 or email me at pflynn@pfgbest.com

When You Are Number Two

Phil Flynn — 2010-07-20T14:54:00Z

The Energy Report for Tuesday, July 20, 2010

When you are number two, aren't you supposed to try harder? China reached a major milestone in its history when it was reported by the International Energy Agency that China had over taken the United States of America as the world’s largest energy consumer. This of course is a label that has belonged to us for a very long time and despite what some environmental naysayers would say, it is a label that we should have worn with pride. For years we heard people scold us because the United States consumes 25% of the world’s energy yet has only 5% of the world’s population. Some looked at our consumption as piggish and that somehow we were bad. Yet what those naysayers failed to realize was that consumption helped drive global economic wealth around the globe. The truth is that our leadership in energy consumption reflected our leadership as a global economic growth engine that fed the world. Not only that, the US was energy efficient in getting better GDP per barrel back on investment than almost anywhere else around the globe. The US was not consuming too much, the problem was that other countries were consuming and producing too little. Countries like China that has about 60% of the world population, yet despite that was a distant runner-up in the energy consumption crown. Back in 2000 China consumed only half of what the US did at that time. The reason of course was that China’s economy, driven by years of communist and socialistic controlled markets, failed to produce the type of economic growth that could support the country with the world’s biggest population and the type of demand growth you would expect in a country in the modern world. China lacked infrastructure and the industrial output that would create wealth that could support that type of demand. Chinese citizens a decade or so ago had more bikes than cars and millions in the country did not even have electricity and still don’t have electricity to this day. Now China has assumed its rightful place as the world’s top energy producer after decades of playing catch up and decades now of a strong upward growth trend. Still despite this noble achievement, shouldn't they be consuming even more? The IEA says that China consumed the equivalent of 2,252 million tons of oil last year. That according to the IEA is roughly 4% more than the U.S. used. The U.S. demand oil equivalent which measures oil, nuclear, coal, natural gas and renewables showed US demand at 2,170 million tons. Despite this great honor and the billions of dollars in economic stimulus that it took to achieve this China says it is not so. China says that the International Energy Agency data is unreliable. The International Business Times reported that, "in February, China’s National Bureau of Statistics had put the total energy consumption in the country at 2.132 billion tons of oil equivalent. Both the agencies deploy different techniques to calculate the energy consumption leading to variations in the assessments, said a NEA official, according to the China Daily. Commenting that the IEA report ignored China’s measures to reduce energy consumption and carbon emissions, Zhou Xian highlighted the country's contribution to carbon-free energy generation. He said China has surpassed the US in generating clean energy from various sources such as hydropower, solar power, nuclear power and wind power.” Well obviously China has liked that number two energy position because it likes to be the underdog when it comes to carbon reduction talks. China is still far less efficient when using energy. The U.S. uses more oil per ton per person because our population is much less than China's. The Wall street Journal says that the U.S. used 7.1 tons of oil per person and in China they used 1.7. Of course in China they have millions that hardly use any. Many feared that when China became the world’s leader in energy consumption the world would have hit peak oil. There were those who estimated that oil prices would be $200.00 a barrel or more. Yet instead we find ourselves with an oil glut. In fact the only thing that moved the oil market yesterday seemed to be stock market optimism or pessimism and the threat of storms in the Gulf. Now one tropical wave is gone but another has seen the odds of it becoming a hurricane increase from 20% to 30%. Still the odds are not high enough to keep the markets focus off of the stock market and to lesser extent the euro. The euro has shown some good strength and technically looks like it wants to move higher. Still as we have been saying oil has been in a range so make sure you respect that. Make sure that you call to get on my daily energy blast and to sign up for my daily buy and sell points on all of the major commodities markets. Just call me at 800-935-6487 or email me at pflynn@pfgbest.com to open your account and check out the best in business news on the Fox Business Network where you can see me every day!

When Irish Eyes Are Crying.

Phil Flynn — 2010-07-19T14:54:00Z

The Energy Report for Monday, July 19, 2010

When Irish eyes are crying.

A downgrade of Irish debt, an oil spill in China and two storm systems down in the Atlantic that bear watching has oil being pulled in different directions. The tug and pull between bearish and bullish forces has oil bouncing in both directions. Now with a whole plate of earnings ahead of us, the dollar and the stock market will be our guide unless of course things get nasty weather wise down south. Overnight Moody's Investors Service cut Ireland's sovereign debt rating to Aa2 from Aa1because of what they say is the government's "gradual but significant loss of financial strength." Moody says that Ireland’s weakening debt affordability, lower economic growth prospects due to the severe downturn in the banking and real estate sectors, as well as liabilities from the bailout of the banking sector all contributed to the downgrade. At first oil broke on this news as it was feared that this downgrade might hit Europe and what is perceived as Euro Zone stability. Yet oil came back as Moody's at the same time lifted the ratings outlook on Irish government debt to stable from negative and said that the risks are now evenly balanced at the new lower rating standard. Besides we all knew that Ireland was in danger of a downgrade in the first place. Don’t cry over spilled milk but I guess you can cry over spilled oil. The latest oil spill is in China. Dow Jones reports that the Dalian Port Company has closed the port for clean-up operations after an oil pipeline explosion at its Xingang berths Friday caused what could be the largest oil spill in Chinese waters, an individual in the shipping industry said. The clean-up could take eight to ten days, the Beijing-based individual told Dow Jones Newswires. However, a shipping agent in Singapore heard that the port could be re-opened in four-five days. "It could worsen port congestion and bring shipping rates up again," the person in Beijing said. In the meantime, port authorities are likely to divert seaborne carriers with cargoes of commodities including oil, iron ore and grains, to neighboring northern ports like Caofeidian and Qinhuangdao, he said. Two storms brewing in the Atlantic will keep the market watching the weather. Two tropical waves, both with about a 20% chance of becoming a hurricane, may keep some of the aggressive bears at bay. Climate at a price Bloomberg News reports that “Proposed Senate legislation to limit greenhouse gases from power plants, refineries and factories would cut U.S. gross domestic product by $452 billion, or 0.2 percent, between 2013 and 2035, the Energy Information Agency. A cap-and-trade program for greenhouse gases, “increases the cost of using energy, which cuts real economic output, reduces purchasing power, and lowers aggregate demand for goods and services,” the agency said in a report on legislation released May 12 by Senators John Kerry and Joseph Lieberman. The legislation, which aims to cut the greenhouse gases scientists have linked to global warming 17 percent from the 2005 level by 2020, would cost the average household $206 a year, the EIA said in the report. Kerry, a Massachusetts Democrat, and Lieberman, a Connecticut Independent, are working on a scaled-back proposal that targets pollution from power plants. Senate Majority Leader Harry Reid, a Nevada Democrat, has said he wants to include a carbon-cutting program for power plants in energy legislation to be debated the week of July 26. Under cap-and-trade, the government issues a declining number of carbon dioxide allowances which companies can buy and sell. Allowances carrying the right to release one metric ton of carbon dioxide into the atmosphere would cost $32 each by 2020 under Kerry and Lieberman’s May proposal, called the American Power Act, the EIA said. Hang onto your wallets. Conflicting news should keep oil in a range. Call for my latest buy and sell points on all major markets 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.

Capped!

Phil Flynn — 2010-07-16T14:54:00Z

The Energy Report Friday July 16, 2010

Capped!

Great News for the oil industry and all of America and the world! The leak in the Gulf is capped! Finally for the first time since the Deep Water Horizon exploded back in April there is no oil leaking from that deepwater well. Still BP and the government are not celebrating just yet. The company still is worried that higher pressure inside the well could cause of explosions in other parts of the pipeline and is monitoring the well by checking pressure every 6 hours. Let’s keep our fingers crossed and say a prayer. Of course what traders really want to know if the upside in oil is capped? Over the last few days the oil market seems to have taken a leadership role in leading the stock market higher and the rest of the world lower. As of late oil traders are taking a more skeptical take on the global economic recovery because despite the slew of good feelings that permeated the marketplace to start the week in the oil patch the facts just does not back those gushy feelings up. The week of old fashion supply and demand fundamentals for the oil market does not bode well for the upside of the oil market or for the economic recovery over all. Whether it is reports from The Department of Energy, the International Energy Agency or OPEC themselves, if you read between the lines the outlook is less than supportive. The Energy Information Agency of the Department of Energy report from the demand side for one was very disappointing. The EIA reported that last week oil demand plunged to the lowest level since last April while supply is well above average. Week over week the drop in distillates supply had the biggest drop since the beginning of the year. We saw the normally supply side focused International Energy agency basically say this week that supplies are just fine. I mean the IEA actually said that they expect oil demand to slow next year in China and most other parts of the world. The IEA forecasts that world oil demand will grow by 1.3 million barrels a day which h is or 1.6% increase. The IEA said it expects total Chinese oil demand to rise by only just 4.8% next year. This year China demand increased by growth of 9.1% this year. Over all the IEA says the global growth rate is less that this year’s growth of 2.1%. So now if we already have a global glut of oil and demand growth slows won’t prices go lower? The IEA which normally screaming for more investment and warned that a drop in oil investment would create a price squeeze seems less concerned. The IEA says that capital expenditures witch did dropped by almost 20% last year should rebound by 10% in 2010. The IEA seems less concern about tight supplies so why should we not be. When the Agency which tried to bring credibility to peak oil debate is blasé about supplies should we not be as well. Even OPEC and their market assessment on the oil market do not bode well for higher prices. OPEC says they expect demand to creep higher not leap higher. OPEC says that demand for crude will grow only by a measly 1.2 percent. That is just over a million barrels per day. That is not the time of growth that will cut into the global oil supply. And do not expect OPEC to be able to reduce production. OPEC revenues are tight and compliance will continue to slip. OPEC has no real control. Now throw in the fears of a double dip recession and the oil outlook is less bullish. Of course the fears of a double dip recession may support oil as well. As the Federal Reserve said in their Fed minutes that if the economy took a turn for the worse there would be more stimuli which are the best hope for bulls to keep oil from collapsing. More stimuli mean a weaker dollar and an artifact crutch for prices. Make sure you are signed up for my daily Energy Report and our daily trade points just call Phil Flynn at 800-935-6487 or email me at pfllynn@pfgbest.com. Also make sure you are watching the Fox Business Network!

In A New York Minute

Phil Flynn — 2010-07-15T14:54:00Z

The Energy Report for Thursday, July 15, 2010

In a New York Minute

In a New York minute or is it minutes. That is how fast we can pop this economic earnings optimism bubble. The oil market that was previously caught up in the wave of good feelings generated by the Alcoa earnings in the beginning of the earning season started to get dragged down by the bummer reality thing. The first sigh of trouble was the American Petroleum Institute report and then a lousy retail sales report followed by a Energy Information Agency supply report that was less then spectacular. The final straw seemed to be the Fed Minutes that wiped away a slew of economic good feelings. Now today you have a report of slower growth in China and a resurgent euro that makes oil traders wonder whether they should focus on weaker dollar or a weaker demand outlook for oil. Yet could big news out of China get oil rolling again? What was it about the Fed Minutes that seemed to take away from the market besides the statement that the economy has softened somewhat? Well more than anything it was the fact that the Fed feels that they should be ready to consider additional steps to boost the U.S. economy if the economy took another turn for the worse. The thought that the Fed is even contemplating the possibility of even more stimulus is a reminder that despite some good corporate earnings we are still not out the economic woods just yet. And despite a much bigger than expected drop in crude supplies, oil demand growth is not out of the economic woods just yet either. Oh sure the EIA reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 5.1 million barrels from the previous week but at the same time we saw a very bearish build in gasoline and distillates. The EIA reported that total motor gasoline inventories increased by 1.6 million barrels last week as gasoline output hit a record high while demand fell back after the holiday. Distillates surged by 2.9 million barrels on surging refinery runs and impressive output. Yet demand fell flat. David Bird of Dow Jones says that U S total implied oil demand fell 4%, or 780,000 Million Barrels per day to 18.777 million barrels per day which is the lowest level since Apr 23 and the biggest drop since Mar 12. Demand for gasoline, the most widely used petroleum product, fell 3.9% in the week after the Jul 4 holiday, to 9.08 million barrels per day the lowest level since Apr 2. Demand for distillate fuel (diesel/heating oil) fell 422,000 barrels per day 10.7%, to the lowest level since Apr 16. The fall in distillate use was the biggest since Jan 9. And as Barbara Powell at Bloomberg points out despite the drop in crude supply the truth is that oil is still a whopping 7% above the five year average. For products, in a weakening demand environment, gasoline is 4.3% above the five year average and distillate a gigantic 23.6% above the five year average. Not a very bullish outlook. Even OPEC is saying that we are well supplied. Dow Jones reports that Oil product markets are likely to remain well supplied throughout the summer driving season according to our friendly little oil cartel. "Given ample stocks for both distillates and gasoline, barring extensive unplanned supply disruptions, the risk of a product supply shortage during the upcoming peak season is very limited," OPEC said in its monthly oil market report. (Upcoming peak driving season?) "Additionally, by having 1.1 million barrels a day of new refinery capacity in 2011, it appears that spare capacity in the downstream sector remains relatively high in the short- to medium-term and the likelihood of produc market developments lifting crude pieces in the future is very marginal."Of course I can almost hear them saying, what about China? What about China. Well China, as with the rest of the world, can chose to look at the barrel as half empty or half full yet new on their currency exchange rate may knock oil out of the doldrums. Bloomberg News reported that Chinese oil imports may decline from this month’s record high as waning energy demand reduces refining profits. China’s GDP fell more than expected which means slower demand. Right! Well hold everything! Now the Peoples Bank of China according its decision on June to end yuan's near two-year-long peg to the U.S. dollar--was an important step in reforming the country's foreign-exchange regime, and the current regime is in China's long-term and fundamental interests. Dow Jones says that the report suggested China must stick to its current exchange-rate regime even as it constrains monetary policy independence and flexibility. "Given the impossible trinity of achieving monetary policy independence, fixed exchange rate and free capital flow in an open economy, a managed floating exchange rate regime will help enhance the proactiveness and capability of macroeconomic management and the effectiveness of monetary policy, curb inflation and asset bubbles and contain macroeconomic risks," PBOC said. Oil is also getting support from a successful Spanish bond auction that gave the euro a boost and put pressure on the dollar. My major point being that you can be bullish or bearish but you should trade like a mercenary. Who needs to be a hero over the long term when recently you would have more than likely been better off trading the range. We may break out to the upside at some point, yet I belive it will be to the downside and at the end of the day does it really matter? If you want to trade then take what the market is giving you. When the breakout comes there will be plenty of time to jump on the band wagon! Make sure you get signed up for my daily energy report and a free trial to my day trade numbers for all the major markets as well as option plays. Just call me at 800-935-6487 or email me at pflynn@pfgbest.com to open your account. And above all make sure that you are watching the Fox Business Network where you can see me every day!

And The Profits Kept Rolling In

Phil Flynn — 2010-07-14T14:54:00Z

The Energy Report for Wednesday, July 13, 2010

And The Profits Kept Rolling In

And the profits kept rolling in from every side. The S&P and the oil reached out and went real high. Now you may feel it should have been a supply/demand cause, but that's not the point my friends. When the profits keeps rolling in, you don't ask how. Think of all the bulls guaranteed a good time now. When the profits keeps rolling out you don't keep books, you can tell you've done well by the happy grateful looks. Supply and demand only slow things down, figures get in the way, dam the statistics and enjoy because oil is on the way. Well at least until we sober up. I think it is fair to say that no one will argue that the oil market, along with a lot of the commodity markets, are again dazzled with the prospect of renewed economic growth. Oil started its incredible run after Alcoa set the tone and even spiked after Intel saw its sale surge a whopping 34% from a year ago and much higher than expectations. Who knew that computers ran on oil? Why even bother talking about the bearish American Petroleum Institute supply and demand report or even the bearish MasterCard Spending Pulse survey when the market is so focused on stock profits and economic euphoria. Well we do because at the first sign of stock market weakness we want to gage how far oil might fall. Let’s start with the MasterCard SpendingPulse report that measures gas demand based on credit card sales at the pump where we saw a major drop in the post 4th of July holiday let down. The survey showed a drop of 4.4% dropping gasoline demand to a five week low. They also reported that gasoline prices fell 7 cents a gallon in a sign retailers were dropping prices in a desperate effort to attract drivers to the pump. This is not normally the type of demand numbers that get our bullish juices flowing. As for that matter neither are the numbers from the American Petroleum Institute. The API reported builds across the board as opposed to the expectations of most analysts. I did call for increases for the API and todays Energy Information Agency report predicting that crude would be up by 3.5 million barrels, gasoline down 1 million barrels and distillates up by 1.5 million barrels. Well the API version says that crude stocks increased by 1.7 million barrels, gasoline up by 1.7 million barrels most likely reflecting the drop in demand that we saw in the MasterCard Spending Pulse report and distillates rose by 3.2 million barrels. So the report is bearish based on expectations and if the Energy Information Agency confirms the increase in supply perhaps oil will think twice before it continues this corporate profit buying binge. In fact it may be this sobering data that is keeping oil restrained in overnight trading. We know that oil is being swept up in the stock market mania yet the weak short term fundamentals means that we are vulnerable to a big correction. We also have to remember that many traders are switching over to the September futures contract. Another factor that helped oil was a rebounding Euro. The euro gained ground on a successful Greek debt sale. Also helping the euro is the recent break in energy prices helped along by recent euro weakness. Dow Jones reported that euro zone inflation slowed in June due to weaker energy price gains, indicating the European Central Bank has ample room to keep interest rates at record low levels for some time, official data showed Wednesday. The euro zone's annual inflation rate eased to 1.4% in June from 1.6% in May, the European Union's Eurostat statistics agency said. On a monthly basis, consumer prices were unchanged in June after rising 0.1% in May. While the weaker euro helped Europe achieve lower energy prices a stronger Yuan may be not be hurting China on the energy demand front but not on the energy company profit side. Dow Jones reports that, “with oil priced in dollars and China's appetite for foreign crude showing few signs of slowing down, you would think that China's three largest-listed oil companies would benefit from a stronger yuan. If so, you'd be wrong. Petro China Co. (PTR), China Petroleum & Chemical Corp. (SNP) and Cnooc Ltd. (CEO) will likely see their production costs rise as a result of Beijing's move toward greater exchange-rate flexibility as those costs are priced in yuan, analysts say. The oil giants can also expect domestic retail fuel prices to drop, and exports of petrochemical products to suffer, the analysts add. Last month, China's central bank said it would allow the Yuan’s exchange rate to become more flexible after holding it steady against the U.S. dollar since July 2008. The two-year peg was put in place as an emergency measure to help stabilize the Chinese economy during the global financial and economic crisis. Even though government officials insist the reform doesn't necessarily mean the yuan will appreciate against the dollar, the Chinese currency has raised around 0.8% in value to 6.7718 versus the dollar since the bank made its move. Some economists expect the yuan to appreciate 3%-5% by the end of this year. China Petroleum & Chemical Corp., or Sinopec, was seen as a major beneficiary of a stronger yuan as China's top refiner sources 70% of its crude oil overseas. China's crude oil imports hit 117.97 million tons during the first half of this year, up 30.2% from the first six months of 2009” At the same time it was reported that China revised up its first-quarter 2009 gross domestic product growth figure to 6.5% from the original 6.2% growth from the previous year. The revision comes after the bureau revised China's 2009 GDP growth to 9.1% from 8.7% earlier this month. Well things have not been good for BP but at least they are not bankrupt. But the same cannot be said for the Nigerian State owned Oil Company. Nigeria’s sitting on some massive amounts of some of the best quality crude in the world. Yet the sad truth this potential life changing bounty has been squandered with greed and corruption. Now according to junior Finance Minister Remi Babalola,debts owed are running into hundreds of billions of naira. This is a very sad story. Make sure you are signed up for my daily trade recommendations and my Daily Energy Report. Just call me at 1-800-935-6487 or e-mail me at pflynn@pfgbest.com to open your account! Also make sure you check me out each day on the best business network in America! The Fox Business Network!!!

A Penny Saved Is A Penny Earned

Phil Flynn — 2010-07-13T14:54:00Z

The Energy Report for Tuesday, July 13, 2010

A penny saved is a penny earned but enough about copper let's talk aluminum. Alcoa set a good tone for the energy markets as they kicked off the earnings season with some better than expected numbers. Yesterday oil prices fell back as the market awaited earnings from Alcoa yet it seems that they were worried about nothing. The Wall Street Journal said, “Alcoa swung to a profit in the second quarter on improved demand and prices after the aluminum producer struggled with anemic prices for the metal a year earlier. Although the price of aluminum has fallen about 12% in 2010, Alcoa offset that drop with a jump in volume, driving a 6% sequential increase to higher-than-expected revenue. It also said that better productivity, foreign-exchange benefits and lower energy costs contributed to the revenue climb. The top- and bottom-line growth was driven by higher volumes from stronger end markets and ccontinued gains from our productivity programs," according to Chairman and Chief Executive Klaus Kleinfeld.” The good earnings results set a nice tone and oil responded as it will to the slew of other numbers ahead of us. The market may also focus on the latest report from the International Energy Agency. The IEA, in their latest report, says they expect world oil demand in 2011 to grow by 1.3 million barrels per day. At the same time they expect the demand from China to slow. Spencer Swartz from Dow Jones writes that the IEA expects oil demand to slow next year in China and most other parts of the world, indicating that crude prices are likely to trade at subdued levels well into next year. Sounds like what we have been saying for awhile now. In its first assessment of 2011 global oil trends, the Paris-based agency forecast world oil demand to grow by 1.3 million barrels a day, or 1.6%. That increase rate is below the 2.1% rise in global crude consumption expected this year, although it is in line with 1.7% growth seen on average annually from 2000 to 2007. Despite a higher rate of global economic growth projected next year, the IEA said the dual impact of improving energy efficiency in industrialized nations and a gradual phasing out of economic stimulus in emerging markets like China--the fastest-growing oil consumer globally--would slow the pace of oil consumption. Very similar to what I said in my mid-year commodity update that you can contact me to get as well as what I said in the beginning of this year. It also said the Organization of Petroleum Exporting Countries would continue to have 5.5 million to 6 million barrels a day of back-up spare oil production capacity far into 2011 to offset any unexpected supply disruptions. A number some have disputed yet unless the economy soars, it will never be put to the test. Most of that ample capacity is held by Saudi Arabia, the world's biggest oil exporter. "Whisper it quietly, but we might, just might, be in for some market stability for a while longer," the IEA said. Whisper it? Scream it from the roof tops! This is the International Energy Agency we're are talking about. They are usually very conservative about spare capacity as they represent the interests of the consuming nations. They want to keep producers producing and to keep prices low. For them to be talking this way is really astounding and really bearish. Yet these are the things we have been seeing and been saying all year. What is more it is the truth! The Wall Street goes on to say that, “the agency, an energy advisor to mostly industrialized nations such as the U.S., said it expects oil prices next year to average $79.40 a barrel. The IEA's latest forecast highlights the more benign view of the global oil market compared with a year ago when many industry observers were warning that a sharp drop in oil exploration spending would hurt future supply and drive crude prices sharply higher by 2010-11. Capital expenditures did drop by almost 20% last year, but are expected to rebound by about 10% in 2010. What has also changed is a more relaxed view on oil consumption. Consumers are still bent on maximizing energy efficiency in places like the U.S. and oil traders have lingering doubts about the health of Europe's and America's economic recovery and the knock-off effect in emerging markets. The IEA said it expects total Chinese oil demand to rise by just 4.8% next year to 9.56 million barrels a day compared with robust growth of 9.1% this year. China is the world's second biggest oil consumer at a distant second to the U.S., which is forecast to burn 18.86 million barrels a day on average in 2011, down slightly from this year. There are some potential problems ahead. Non-OPEC oil supply is forecast to grow by just 400,000 barrels a day in 2011, half the growth rate expected this year and far below recent historical averages, due to aging oil fields. The IEA also cautioned that regulatory and legal uncertainties in U.S. offshore oil drilling, stemming from the Gulf of Mexico oil spill, could cut U.S. oil output by up to 300,000 barrels a day by 2015. Speaking of that, for the Obama administration, perhaps the third time will be the charm as Reuters News reported. The U.S. Interior Department will issue a new offshore drilling moratorium on Monday that will end Nov. 30 or sooner, said a government source familiar with the new drilling plan. The White House said the new drilling moratorium will come out later on Monday. Unlike the initial moratorium, which was blocked by a federal court, the new one has a specific end date. The moratorium could end sooner than Nov. 30 if Interior Secretary Ken Salazar determines that deepwater drilling can be carried out safely. Under the new moratorium, drilling in shallow waters would be allowed to continue as is the case now if oil companies meet new safety and environmental requirements and deepwater oil production would also be allowed to continue. The Interior Department will be "open to modifying" the new exploratory drilling suspensions if the oil industry can show it can operate safely in deep waters, the source said. Obviously this is an attempt by the Obama administration to save face in the bungled handling of the situation in the Gulf. With the courts throwing out two previous attempts by the government to stop drilling this third attempt has a lot of, ifs, ands, or buts and they hope it will pass the muster of the courts. Of course remember, it is three strikes and you are out. There are also European worries still out there. It was reported that Moody’s downgraded Portugal from A1 from AA2. Then the good news was that the outlook for Portugal was stable. Despite all the news and influence by the dollar, oil still seems to be in a trading range. Still I feel the best way to trade the market in the short term is to use options or to trade the ranges. You can call me to get signed up for retrial my daily ranges at 800-935-6487 or you can e-mail me atpflynn@pfgbest.com to open your account. Also make sure you check me out each day on Fox Business Network!

The Bulls Have To Earn Their Keep.

Phil Flynn — 2010-07-12T14:54:00Z

The Energy Report for Monday, July 12, 2010

The Bulls Have to Earn their Keep.

This week oil bulls are going to have to earn it. Last week oil rallied to a renewed sense economic optimism. Risk appetite came as gold rallied and the 10 year yields went back to above 3%. We saw the industrial metals rally and we seemed to finally shake off the weak jobs environment in favor of this sense that gosh oh golly things just have to get better. Or maybe we figured that things just cannot get worse. So now welcome to earnings season. You know, put up or shut up time for all of the stocks. To follow through on that guided or misguided optimism this week's earnings season will have to keep the momentum going. Oil bulls will desperately need those numbers to be good. As is tradition, earnings season will start up and the commodity related stocks such as Alcoa and traders are hoping that they beat expectations. If they don’t set the right tone and unless the stocks stay strong, oil will start focusing again on a glut of supply. Oil bulls need the market to focus on anything other than supply. With no tropical storm worries it’s all about earnings, not to mention of course the stocks and the dollar, for oil from this point forward. Of course if the earnings come out like I think they will it will be very mixed. Some will come out better than expected and some will come out worse leading to oil staying pretty much in a tight trading range. This will keep us playing the swings as well as option strategies like condors and butterflies. You have to take what the market is giving you. Because of this trading environment and because of the recent market action the Energy Information Agency last week kept their forecast for oil unchanged. The EIA projected that the West Texas Intermediate (WTI) spot price, which ended June near $76 per barrel, will average $79 per barrel over the second half of 2010 and $83 per barrel in 2011. For gasoline the EIA says that they expect regular-grade motor gasoline retail prices will average $2.80 per gallon during this summer's driving season (the period between April 1 and September 30), up from $2.44 per gallon last summer. The summer gasoline price forecast is up only slightly ($0.01) from last month’s Outlook, but $0.12 per gallon lower than the EIA forecasted in April, when oil prices were significantly higher. For traders this present challenges and opportunities. It is important to realize the type of market you are dealing with. This is unlike past years where the market had a distinctly bullish or bearish flare because this market will be a little of both. You cannot marry one side of the market. As for natural gas the Energy Information Agency says that the Henry Hub spot price which averaged $4.80 per Million Metric btu in June was $0.66 per MMBtu higher than the average spot price in May. The IEA forecast for natural gas prices in the second half of 2010 averages $4.68 per MM Btu, $0.32 per MMBtu higher than last month. The EIA says the risk of hurricane outages and the projected reduction in drilling activity combine to strengthen prices through the year. A small decline in U.S. production alongside increased consumption leads to higher prices in 2011; the projected Henry Hub spot price averages $5.17 per MMBtu. The EIA says that uncertainty over future natural gas prices is lower this year compared with last year at this time. Natural gas futures for September 2010 delivery for the 5-day period ending July 1 averaged $4.77 per MMBtu, and the average implied volatility over the same period was 53 percent. This produced lower and upper bounds for the 95-percent confidence interval of $3.16 and $7.18 per MMBtu, respectively. At this time last year the natural gas September 2009 futures contract averaged $4.00 per MMBtu and implied volatility averaged almost 76 percent. This rendered the lower and upper limits of the 95-percent confidence interval at $2.25 and$7.14 per MMBtu. Make sure you are getting our latest buy and sell points as well as option plays. Just call me at 800-935-6487 or email me at pflynn@pfgbest.com to open your account. Also start your week out right by tuning into the Fox Business Network where you can see me every day!

Going Coastal

Phil Flynn — 2010-07-09T14:54:00Z

The Energy Report for July 9, 2010

Going Coastal.

Darn, I was watching the wrong coast. The Energy Information Agency showed a big 5 million barrel drawdown in crude supply due to hurricane activity. The problem was that we were focused on the wrong hurricane. Or should I say hurricanes? All week oil traders watched with a mix of anticipation, angst and fear about the path of Hurricane Alex and its potential impact on oil operations and oil imports. Yet despite the fact that Alex did slow oil imports, it was two West Coast Hurricanes Celia and Darby that actually had more impact on the nations supply. Normally storms in the West Coast and the Pacific do not catch the imagination of traders especially because the West Coast, while a big oil consumption market, usually does not impact the rest of the nation. The Gulf Coast on the other hand is the part of the country where the oil imports are the largest. Oil from the Gulf can get shipped via pipeline to other parts of the country where in the West Coast its imports feeds just their markets. So many assumed that when we saw that big 5 million barrel crude draw hurricane Alex was the culprit. Yet the truth is that is not the case. Total oil imports in the Gulf Coast actually increased from 5,183 million barrels to 5,529 million barrels. Yet in the West Coast they dropped from 1,406 million barrels to 1,131 million barrels. A much larger drop and a huge drop if you look at it as a percentage of total West Coast imports. It appears that Category 5 Darby and category 3 Darby played a number on the West Coast import market. A source from the Port of Los Angeles did say that shipping activity was down. So overall, the drop in the West Coast Offset what was pretty darn large import numbers and was a big reason we saw such a large crude oil draw. Overall U.S. crude oil imports averaged 9.4 million barrels per day last week which was down just 68 thousand barrels per day from the previous week. There were other things of note in yesterday's Energy Information Agency report. We hit, what I guess, is a major milestone on the refining side as the EIA says that refining runs hit the highest level since January of 2008! Is that a real sign of an economic recovery? All right let’s not get too excited because we did not hit 90% but we came close. The EIA says that last week into the big 4th of July holiday that U.S. crude oil refinery inputs averaged 15.2 million barrels per day during the week ending July 2, 135 thousand barrels per day above the previous week’s average. Refineries operated at 89.8 percent of their operable capacity last week. Gasoline production decreased last week, averaging 9.4 million barrels per day. Distillate fuel production decreased last week, averaging 4.4 million barrels per day. The EIA said that led to an increase of total motor gasoline supply of by 1.3 million barrels last week and distillate fuel inventories increased by 0.3 million barrels, and are also above the upper boundary of the average range for this time of year. How far above the average range? David Bird of Dow Jones says that US stocks of distillate fuel are at the highest level for the week on EIA data beginning in August, 1982. In other words a record! Bird says that stocks are highest in any week since January 8. Stocks are sufficient to cover 40.44 days of current demand, which was 3.949 million barrels last week which was the most since May 28. As far as demand overall the EIA says that total products supplied over the last four-week period has averaged 19.3 million barrels per day, up by 5.1 percent compared to the similar period last year. Over the last four weeks, motor gasoline demand has averaged 9.4 million barrels per day, up by 2.0 percent from the same period last year. Distillate fuel demand has averaged 3.8 million barrels per day over the last four weeks, up by 15.8 percent from the same period last year. Jet fuel demand is 0.5 percent lower over the last four weeks compared to the same four-week period last year. There is no doubt there is some improvement in demand still it needs to continue to improve. Still oil found inspiration from this report and a report from the International Monetary Fund that they expect the world economy will expand 4.6% in 2010. That is the biggest gain since 2007 before the great economic meltdown. The IMF had projected in April 4.2% growth rate. They are looking to faster growth in Brazil, China and India to lead way. It defiantly led oil bulls back into the market. Yet the bulls abandoned natural gas. With storm threats in the Gulf of Mexico diminishing and a larger than expected 78 bcf injection, the market broke down for the second day in a row. We should get ready to fade the break on natural gas and fade the rally on crude. Make sure you call for my entry and exit points on all major markets. Pick up the phone and call me at 800-935-6487 or email me at pflynn@pfgbest.com to open your account. The best way to spend the day is by watching the Fox Business Network where you can see me every day! Make sure you are getting it!

Everything Is Beautiful In Its Own Way

Phil Flynn — 2010-07-08T14:54:00Z

The Energy Report for Thursday, July 8, 2010

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!

They Keep Me Hanging On

Phil Flynn — 2010-07-07T14:54:00Z

The Energy Report for Wednesday, July 7, 2010

They keep me hanging on.

Set me free, why don't ya babe. Get out my life, why don't ya babe. Cause you don't really want to buy me, you just keep me hanging' on. You don't really need me but you keep me hanging' on. The oil bulls have got to be asking that question. Why oh why do you keep me hanging on by my finger tips? Another failed rally after the stocks led oil up it was the oil that led the whole mess down. Now even the most bullish analysts are starting to turn bearish as their bullish fantasies are becoming a nightmare. Of course if they are turning bearish should I be turning bullish? At some point the data is coming home to roost. A sluggish economic recovery underpinned by a weak employment picture does not bode well for the economic recovery. Oh sure oil got a bounce on the fact that the Institute for Supply Management, (ISM) said its index tracking service-oriented was still expanding at 53.8 yet how could that carry the day when it was and below market expectations. Oil bulls started to ask themselves why is this bullish and starting to dump contracts late in the afternoon. That kind of market action with a failed rally might be the precursor to a total market meltdown. Oil bulls had enough and were ready to declare the bull move over yet now news out of China may keep them hanging on. Dow Jones reports that China, the main driver of all energy demand growth, announced a plan to spend a whopping bring $100 billion in infrastructure spending to this year. Oh sure they need it and not just the infrastructure but a new stimulus driver to keep up their rate of oil demand growth to meet the bulls market expectations. Dow Jones says that China’s consumption of products such as bitumen, which is used in road building, soared after Beijing ramped up capital spending last year to cushion the impact on its economy from a sharp slowdown in exports to the U.S. and Europe. This year's $100-billion outlay will be targeted at 23 energy-intensive projects in remote western provinces such as Gansu and Sichuan, China's National Development and Reform Commission said on its website. While that news was supportive for oil there was news out of China that was bearish for gold. Dow Jones reported that a statement by China's State Administration of Foreign Exchange that it won't use gold as a "major channel" for the investment of China's $2.45 trillion in reserves has added to the downward pressure on gold. So while the safe haven plays like bonds and the dollar are benefiting, gold has lost a bit of luster. Oh sure we know the Chinese like to say stuff like that to break the market so they can buy more buit right now it is bearish. That means as a safe haven the dollar is a better bet and that takes away some of the bullish impact from the China news. Is it any wonder why I am advising most clients to play the trading ranges? Oh sure I am long term bearish as I have been pretty much all year but this downtrend has been choppy and uneven. Make sure you are signed up for my daily energy blast and receive a trial of my daily entry and exit points. Just call me at 800-935-6487 or email me at pflynn@pfgbest.com to open your account. Why don't you make a new start by watching the Fox Business Network where you can see me every day!

There is a substantial risk of loss in trading futures and options.Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

After The Fireworks

Phil Flynn — 2010-07-06T14:54:00Z

The Energy Report for Tuesday, July 6, 2010

After the Fireworks.

Now that the fireworks are over, the question becomes can oil rebound from the low seventies. The oil market is trying to get up off the mat after a very disappointing jobs report last week. So if the oil market comes back, does that mean the economy is not so bad? What does the government need to do to get the private sector moving again or maybe is it time that they get out of the way?Non-farm payrolls fell by 125,000 as the census, the best job stimulus the government had going for it, cut 225,000 temporary workers. Yet at the same time the jobless rate fell to 9.5 percent from 9.7 percent as the labor force shrank. This does not bode too well for oil from the demand side of the equation yet from the price side of the equation it is not too clear. The economy is still so weak that the Fed will keep their foot on the economic accelerator creating some demand for oil but even more a weak dollar thereby keeping oil bulls from getting totally annihilated.It appears that this anemic job growth is making the dollar look like it is running out of steam. It has been dollar strength that has pulled oil back down into the low seventies from the mid-eighties. Now it appears that because our job situation is so bleak not even the bad news in Europe can keep us supported.What did he know and when did he know it. Apparently Obama knew a lot more than he was letting on. According to the Wall Street Journal, “Less than four months after President Barack Obama took office, his new administration received a forceful warning about the dangers of offshore oil drilling. The alarm was rung by a federal appeals court in Washington, D.C., which found that the government was unprepared for a major spill at sea, relying on an "irrational" environmental analysis of the risks of offshore drilling. The April 2009 ruling stunned both the administration and the oil industry, and threatened to delay or cancel dozens of offshore projects in Alaska and the Gulf of Mexico. Despite its pro-environment pledges, the Obama administration urged the court to revisit the decision. Politically, it needed to push ahead with conventional oil production while it expanded support for renewable energy.” “Another reason: money. In its arguments to the court, the government said that the loss of royalties on the oil, estimated at almost $10 billion, may have significant financial consequences for the federal government." The U.S. Court of Appeals reversed its decision and allowed drilling in the Gulf to proceed—including on BP PLC's now-infamous Macondo well, 50 miles off the Louisiana coast. The Obama administration's actions in the court case exemplify the dilemma the White House faced in developing its energy policy. In his presidential campaign, President Obama criticized the Bush administration for being too soft on the oil industry and vowed to support greener energy forms.” So much for change!You can change your life by tuning to the Fox Business Network where you can see me every day! You can also call me to get the latest trade recommendations at 800-935-6487 or email me at pflynn@pfgbest.com to open your account.

Firecracker!

Phil Flynn — 2010-06-30T14:54:00Z

The Energy Report for Wednesday, June 30, 2010

Firecracker!

Yet good news today out of Europe and the fact that yesterday's selling was more than likely overdone is bringing the market back. The euro is a major reason why oil prices go up or down and it was under pressure in recent days as the market feared a liquidity squeeze in Europe due to the thought that the European Central Bank was going to have to lend banks more money. But it appears the banks took less money than thought. The ECB loaned banks 131.9 billion Euros (($161.4 billion) at its 3 month lending auction which was less than expecting giving a boost to the Euro and a boost in the price of oil.

Despite the demand destruction fears that permeated the marketplace the American Petroleum Institute showed some signs of life. The API reported one whopper of a crude oil draw to the tune of 3.4 million barrels. And 1.9 million of those precious barrels came from the most sensitive WTI area in Cushing, Oklahoma. Gasoline supplies ahead of the holiday fell 908,000 barrels and yet a massive 4 million barrel build in distillates though may have tempered some of the bullishness on the demand side.

In this time of financial regulation and assault on the free market place, I think it I important to remember the ideals that has made this country great. This is the land of opportunity with the inherent belief that when people are left to their own devices and industry, greater things than have ever been imagined have been achieved to benefit all of mankind. As the great financial crisis began to unwind governments around the globe tried to deny any responsibility and tried to blame just about everything and anybody else. During this time, financial speculation and speculators have been unfairly maligned. Those that have done so have failed to acknowledge or grasp the fact that speculators and speculation really helped save us from a much worse fate. Speculators and the free markets have forced governments and banks to acknowledge the real damage done by their financially irresponsible ways and overspending and over taxation. If it were not for speculators many of them could have hidden their errors creating even more pain to the global community. It is in this spirit and in the spirit of the greatness of America that I bring back by popular demand the “Speculation of Independence”.

When in the course of human trading events, it becomes necessary for one market to dissolve the fundamental bonds which have connected them with another, and to assume among the powers of the market, the separate and equal station to which the laws of supply and demand and of nature's God entitle them, with a decent respect to the opinions of the buyers and the sellers requires that they should declare the causes which impel them to admit that we have a fair price for oil. We hold these truths to be self-evident, that all traders are created equal, that they are endowed by their Creator with certain unalienable rights that among these are life, liberty and the pursuit of profits. That to secure these rights markets are instituted among men and women deriving their just powers from the consent of the hedgers and the speculators. That whenever any form of long or short position becomes destructive to these ends, it is the right of the position holders to alter or to abolish said position and buy or sell it, and to institute a new position, laying its foundation on such principles and organizing its portfolio in such form, as to them shall seem most likely to affect their safety and happiness.

Free Markets For Free People! Enjoy Your Independence! Don’t let the government take that away! Have a Happy and safe 4th of July celebration that would make our founders proud! Make sure you are signed up for my daily trade levels and make sure you are sighed up of todays Webinar. Just call me at 800-935-6487 or email me atpflynn@pfgbest.com Also remember that Uncle Sam wants you to check me out today on the Fox Business Network. If you don’t get it it is you constitutional right to call your cable operator and demand it! In fact it is almost your patriotic duty for heaven sakes!

_________________________

Phil Flynn

806 W. Washington Blvd.

Chicago, IL 60634

312 563-8344 / 800 935 6487

Did someone light the fuse so the global economy could blow up again? Bullish dreams for oil exploded in a spectacular array of global economic worries. Forget about Hurricane Alex for the moment because the oil complex sure has. It is time to start worrying about the Euro zone, China, the end of the quarter and whether or not you can get reservations at the beach for the 4th of July fireworks. All of these issues played into yesterday massive stock market selloff. Traders worried about protecting any profits they may have and a terrible drop in consumer confidence sent the market on huge downward spiral. This raised fears of rising oil demand destruction and left traders to wonder what could governments do to stop the move and all was bleak as traders sold just about everything and went home early.Yet good news today out of Europe and the fact that yesterday's selling was more than likely overdone is bringing the market back. The euro is a major reason why oil prices go up or down and it was under pressure in recent days as the market feared a liquidity squeeze in Europe due to the thought that the European Central Bank was going to have to lend banks more money. But it appears the banks took less money than thought. The ECB loaned banks 131.9 billion Euros (($161.4 billion) at its 3 month lending auction which was less than expecting giving a boost to the Euro and a boost in the price of oil. Despite the demand destruction fears that permeated the marketplace the American Petroleum Institute showed some signs of life. The API reported one whopper of a crude oil draw to the tune of 3.4 million barrels. And 1.9 million of those precious barrels came from the most sensitive WTI area in Cushing, Oklahoma. Gasoline supplies ahead of the holiday fell 908,000 barrels and yet a massive 4 million barrel build in distillates though may have tempered some of the bullishness on the demand side. In this time of financial regulation and assault on the free market place, I think it I important to remember the ideals that has made this country great. This is the land of opportunity with the inherent belief that when people are left to their own devices and industry, greater things than have ever been imagined have been achieved to benefit all of mankind. As the great financial crisis began to unwind governments around the globe tried to deny any responsibility and tried to blame just about everything and anybody else. During this time, financial speculation and speculators have been unfairly maligned. Those that have done so have failed to acknowledge or grasp the fact that speculators and speculation really helped save us from a much worse fate. Speculators and the free markets have forced governments and banks to acknowledge the real damage done by their financially irresponsible ways and overspending and over taxation. If it were not for speculators many of them could have hidden their errors creating even more pain to the global community. It is in this spirit and in the spirit of the greatness of America that I bring back by popular demand the “Speculation of Independence”. When in the course of human trading events, it becomes necessary for one market to dissolve the fundamental bonds which have connected them with another, and to assume among the powers of the market, the separate and equal station to which the laws of supply and demand and of nature's God entitle them, with a decent respect to the opinions of the buyers and the sellers requires that they should declare the causes which impel them to admit that we have a fair price for oil. We hold these truths to be self-evident, that all traders are created equal, that they are endowed by their Creator with certain unalienable rights that among these are life, liberty and the pursuit of profits. That to secure these rights markets are instituted among men and women deriving their just powers from the consent of the hedgers and the speculators. That whenever any form of long or short position becomes destructive to these ends, it is the right of the position holders to alter or to abolish said position and buy or sell it, and to institute a new position, laying its foundation on such principles and organizing its portfolio in such form, as to them shall seem most likely to affect their safety and happiness. Free Markets For Free People! Enjoy Your Independence! Don’t let the government take that away! Have a Happy and safe 4th of July celebration that would make our founders proud! Make sure you are signed up for my daily trade levels and make sure you are sighed up of todays Webinar. Just call me at 800-935-6487 or email me atpflynn@pfgbest.com Also remember that Uncle Sam wants you to check me out today on the Fox Business Network. If you don’t get it it is you constitutional right to call your cable operator and demand it! In fact it is almost your patriotic duty for heaven sakes!

This a substantial risk of loss in trading futures and options.Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.