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Pandemically Speaking

Tue, May 5 2009, 06:34 GMT
by Phil Flynn

Alaron  |  View company's profile

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Pandemically speaking. If you cannot get filled on your oil trade when a worldwide pandemic breaks out when can you? Boy, I take a vacation and looks like the world is coming to an end.

Oil prices retreated initially on fears that the H1N1 virus - the swine flu - would cut into travel and reduce economic activity and thereby reduce the demand for oil. Of course we are not supposed to call it swine flu because there is no proof that even though this is a mixture of swine, bird and human flu you cannot get it by eating pork. And yet the Wall Street Journal reports that the U.S. Agriculture Department said late Saturday that swine in Canada have tested positive for the currently circulating strain of H1N1 influenza that is circulating around the world and has already caused more than 100 deaths. This is the first detection of the virus in hogs that up until now was considered to be circulating only from human to human.

According to USDA Secretary Tom Vilsack, a Canadian carpenter who had been to Mexico came down with flu symptoms upon his return home. He then did work on a hog farm in Alberta and subsequently his family and the swine fell ill, exhibiting influenza symptoms. If the virus is indeed jumping from humans to animals and vice versa, as the Canadian case suggests, the seriousness of the disease will likely be heightened. The development could cause new problems for the pork industry, which has so far gone to great lengths to distance itself from the current outbreak as it has hammered trade and consumer sentiment. On Friday the National Pork Producers Council, said "the flu virus...never has been found in pigs anywhere in the world” at least until Saturday.

So the oil market is torn between reacting to the threat of the “swine flu” contracting demand versus the possibility that the economy in China is growing once again. Copper is flying and oil rebounding after the release of the China Purchasing Manager Index, a gage of the Chinese manufacturing sector. The CLSA rose to 50.1% showing expansion in a very bullish leading indicator to future energy demand in China. It seems the stimulus dollars being spent by the Chinese is having a positive impact on the Chinese economy and also a sign that global demand for China exports could be improving. Perhaps the impressive resilience of the oil market can be explained in part by this number.

It is great to be back and judging by the amount of emails I got it seems I was missed. I will try to get caught up and respond to all of you by the end of the week. I am refreshed and ready to go and if you are ready to go just call me at 800-935-6487 or email me at pflynn@alaron.com to open your account! And don’t forget to check me out every day on the Fox Business Network.

Buy June crude oil at 4580 - stop 4430.

Buy June heating oil at 12500 - stop 11900.

Buy June RBOB at 12900 - stop 12700.

We're short June natural gas from apprx 390 - lower stop to 360!!!

Objective is 290!!!

Published on  Tue, May 5 2009, 11:13 GMT

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