The Energy Report

February 26, 2010

Name: Phil Flynn

Company: PFGBEST

Years Trading: 25

Movie: Patton

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The Energy Report Friday, February 26, 2010
By Phil Flynn, PFGBEST.com

Oh No My Recovery is Nascent

Hey maybe, just maybe mind you a "nascent" recovery isn't so bullish for oil after all. You think? Fed Chairman Ben Bernanke may have given oil a bit of a boost by his proclamation that interest rates will stay low and that the economy still needs his help seemed not to be as bullish for stocks and oil especially after weak durable goods report and weekly jobs number. In fact you could almost see the mood of the market shift as you glanced across the entirety of the commodity board. You could sense fear as oil broke along with industrial metals like copper yet gold and silver and the dollar rallied which is a sign that the market is worried that the global economy is going to get very ugly. Again! Of course there were reports like the one by the Bombay Bullion Association that said that gold imports into India increased by 400%from last year and speculation that the Chinese were active buyers as well but the negativity of stocks and industrials and strength in the treasuries suggests that angst about the recovery is rising.

The Bottom line is that Ben comments do not bode well for future energy demand and is not like demand has been that great any way. Case in point is comments by the executive director of International Energy Agency Nobuo Tanaka as reported by Dow Jones Newswires who said that global economic recovery has yet to boost demand for oil. Not only had that he said that as we look forward there is actually more downside risks to demand then upside risks. IEA executive director Nobuo Tanaka told Dow Jones Newswires that "Demand numbers have not been as strong as the macro economists say the economic recovery has been. With stimulus packages, the economic recovery may be happening, but we haven't seen any statistics that demand is recovering." He also says that the IEA has been suspicious these months about what is happening with regard to reports of improving demand and higher prices.

Maybe what is happening is that the economy and demand growth just is not happening to the extent oil bulls would like to believe. Tanaka also says it is important that leading producer and consumer countries need to provide clearer data on production and demand levels. With emerging markets expected to account for any increases in oil demand this year. He also said that "It would be good for China, and in their own interests, to provide good data and stabilize the market."

Dow Jones also reported that Scott O'Malia, one of two Republican commissioners at the U.S. Commodity Futures Trading Commission, raised concerns about a lack of oil data from developing countries like China and Russia. "It's imperative that oil markets have accurate and timely data regarding tightening in market conditions if we hope to avoid the future price spikes that will undermine our economic growth." Oh and buy the way the Speculators help with that too. Giving the market the best idea how market conditions are.

And if you want more evidence that demand is not that great the US Department of Energy's Short Term Energy Outlook is another grim reminder. The DOE said that US oil demand for 2009 was at the lowest level since 1997. Revised demand averaged 18.686 million barrels a day which was down 4.2%, or 812,000 barrels a day, below a year ago. This is the fourth year in a row that demands fallen and the first time that that has happened since 1979-83.

Oil Imports also dropped dramatically falling 13.7%, in December from a year ago or 1.286 million barrels. That was the biggest drop since 1999.

I guess the question you have to ask yourself if you are bullish is why? The China demand numbers are suspect, it appears the dollar has bottomed and demand is tepid. The price of oil has been supported by the Fed yet with rising concerns of debt and credit issues in Europe the dollar is looking better every day. I know there are those out there that think I am crazy to say that oil could go back to the forty handle yet the bearish elements are rising. There is a shifting of the economic props that have been propping us up and that will lead to lower prices over the long run. Of course as I have said time and time again it will not be a straight shot down. We will work through a very down trend shifting from one trading range after another. In the mean time play the ranges and call me for the latest at 800-935-6487 or email me at pflynn@pfgbest.com. And always check out the most awesome business channel in the world on the Fox Business Network

About the Author

Phil Flynn is Energy Analyst and General Market Analyst with PFGBEST (www.pfgbest.com). Phil is one of the world’s leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil’s market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, traders and global media.

Because he has been available to media around the clock, even during some of the most turbulent market periods in history, and because he has built a solid reputation for accuracy in his market analysis and forecasts, through thousands of interviews and broadcast appearances for more than a decade, Phil Flynn has become a headline-making name even as he continues to provide expert advice and customer care to his proprietary trading account clients.

Media highlights include: CNN, CNBC, Bloomberg, ABC, CBS with Katie Couric, NBC’s “Today Show” and “Nightly News with Tom Brokaw”, FOX’s “O’Reilly Factor”, PBS’s “The Newshour with Jim Lehrer” and “Nightly Business Report”, MSNBC’s “The News with Brian Williams”, Wall Street Journal Report, The Wall Street Journal, Business Week, Investor’s Business Daily, The New York Times, The Los Angeles Times, Chicago Tribune, Associated Press, The Toronto Globe & Mail, Houston Chronicle, Futures Magazine, National Public Radio’s Marketplace, a chat with the President of the United States, and many more venues.

You can read Phil’s daily market analysis and blogs at www.pfgbest.com.

PFGBEST is among the largest non-clearing U.S. Futures Commission Merchants, with customers, affiliates and brokerage offices in more than 80 countries. The company is a leader in sustainable investing through diversified products including managed funds, futures, forex, options, full-service and discount brokerage, trader education, market research, and direct online futures trading through its BESTDirect™ platform, and numerous other platforms and applications.

Phil’s commitment to and experience in futures trading is documented in two books, The Mind of a Trader (Financial Times/Pitman,1997), and Trading Online (publisher, date), both by Alpesh B. Patel. Phil is a lifelong resident of Illinois. He attended Daley College in Chicago before beginning his career on the trading floor of the Chicago Mercantile Exchange.

Phil Flynn
Phone: 800.935.6487
Email:pflynn@pfgbest.com