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On the Dark Side!!

Mon, Mar 2 2009, 17:10 GMT
by Phil Flynn

Alaron  |  View company's profile

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The dark side's calling now, nothing is real. The markets never know just how to feel. From out of the shadows and into dream, makes me fell crazy, makes the world so mean. Ain’t nothing going to save you from policies that are blind. When you slip to the dark side you cross that line. On the dark side, oh yeah we are on the dark side.

Darkness once again is overshadowing the energy complex and the markets fear the darkness with another major bank bail-out. The government overnight pumped another $30 billion in to AIG as the morning light shows them reporting a staggering $61.7 billion loss. This is the fourth time that taxpayers have thrown massive amounts of money at AIG to save the company from bankruptcy, the same taxpayers that already own 80% of the company. The government is trying to restructure it and the taxpayers fate waits in the wings.

The market and Europe seem to be rejecting Obama’s budget and moves towards protectionist socialism. Europe criticized the Obama administration for their buy America provisions in the stimulus bill. But even a larger risk is the impact that the crisis can have on a United Europe.

The New York Times reports that the leaders of the EU gathered in Brussels in an emergency summit meeting that seemed to highlight the very worries it was designed to calm: that the world economic crisis has unleashed forces threatening to split Europe into rival camps. The Times said that an urgent call from Hungary for a large bailout for newer, Eastern members was bluntly rejected by Europe’s strongest economy, Germany, and received little support from other countries. Chancellor Angela Merkel of Germany, said countries must be dealt with on a case-by-case basis. The Times goes on to say that the traditional concept of “solidarity” is being undermined by protectionist pressures in some member countries and the rigors of maintaining a common currency, for a region that has diverse economic needs. Particularly acute economic problems in some newer members that once were part of the Soviet bloc have only made matters worse. A must read in the New York Times.

Contango cut ups. Bloomberg News is reporting that the United States Oil Fund LP said it has no knowledge of being investigated by the U.S. Commodity Futures Trading Commission for oil trading practices. Last week the CFTC said it is examining the involvement of the United States Oil Fund and other investors regarding an increase in the price difference between two oil contracts earlier this month. The fund maintains holdings in West Texas Intermediate crude oil, the grade traded on the New York Mercantile Exchange since 1983.

Bloomberg reports that Katie Rooney said, “We have not, as of this morning, heard from anyone at CFTC enforcement,” a spokeswoman for the United States Commodity Funds LLC, said in an e-mail. The company is prepared to work with regulators in any investigation, she said. The Alameda, California-based company is the manager of the United States Oil Fund. The United States Oil Fund controls 20 percent of the open interest in the April crude contract on the Nymex, according to data on the fund’s Web site and exchange data. It holds 59,495 contracts compared with Nymex open interest of 293,507 contracts. But despite that fact, the CFTC is worried that the buy only funds affect the market! Remember for every buyer there has to be a seller.

Reuter’s News is reporting that US natural gas drilling rig counts fell below 1,000 for the first time in 5 years. The number of rigs drilling for natural gas in the United States fell below 1,000 last week for the first time in nearly five years, according to a report on Friday by Houston-based oil services firm Baker Hughes. The report showed there were 970 U.S. rigs drilling for natural gas, down 48 from the previous week and 448 below the same week last year. The last time natural gas rigs fell below 1,000 was on May 7, 2004, when the count totaled 994. The current total is the lowest for gas drilling rigs since March 19, 2004, when there were 963 gas rigs operating. The natural gas rig count peaked last year at just over 1,600 in September, but traders said tight credit and a 70 percent slide in gas prices over the last eight months have forced some producers to scale back drilling operations. U.S. natural gas production in the first quarter was still expected to be up from the same period last year despite the recent rig pullback, primarily due to strong gains from shale formations.

Sell April Crude at 4770 - stop 5100.

We're short April heating oil from apprx 12342 - stop 13300!

Sell April RBOB at 14090 - stop 14300.

Sell April natural gas at 500 - stop 540.

Published on  Mon, Mar 2 2009, 17:12 GMT

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