They have cut with all of their heart, but in the past someone’s torn it apart, as they try to take all that we have. But now they might try to cut once again. Baby, they might try to cut once again. But I know, the first cut is the deepest, baby I know, the first cut is the deepest, because when it comes to being lucky, were cursed and when it comes to OPEC it's worse. The Saudis say they are on side, and it is crocodile tears that they cried, to stabilize the market they tried, but it was the demand side that just gets fried. They say they may try to cut again, but I know that the first cut is the deepest, baby I know the first cut is the deepest…

And the next cut could be their last. Has OPEC finally achieved their goal of “stabilizing” or should I say manipulating the global oil market? Should they cancel their March meeting? Now I know that this type of question is not in the domain of our Energy Secretary Steven Chu who is too busy focusing on green energy and other stuff to be concerned with this mundane petroleum stuff. He probably is up in his office right now splitting some atoms or pointing his fan out his window so he can try to cool the planet. I mean a man of his superior intelligence shouldn’t be bothered will that dirty petroleum gunk when he is working on some mathematical equations to save planet earth for heaven sakes. Which I guess leaves it up to the trusty old Energy Report to get down and dirty right into the heart of those spewing greenhouse gases to question and analyze OPEC motives and their impact on the economy and our way of life. I know it is not as important as making the planet green but gee, I guess someone has to do it.

The truth is that maybe OPEC has achieved their goal! Assuming of course the real goal was to make more money. But as much as I would like to give OPEC credit for this marvelous achievement, the truth is that really their success was not all of their own doing. In fact OPEC may have gotten just a little lucky. Oh sure OPEC compliance was shall we say magnificent. Just Monday a Reuter’s survey put OPEC compliance was around 81 percent which is close to record for those notorious cheaters. Oil Movements the Tanker tracker firm reported that crude oil exports from the OPEC will fall by 430,000 in the 4 weeks before March 21, declaring, "The downhill race between OPEC supply restraint and falling oil demand is still in contention and that data showing up the sharp rate of decline in production and exports in key economies in the fourth quarter is likely to feed into another round of downward revisions to oil demand forecasts for this year. It has always been my contention and still is that OPEC was hurting its own cause by announcing big production cuts in a slowing economy. In fact the real reason OPEC compliance is so good is that demand is just that bad. It is a lot easier to cut back on production when no one wants to buy your product in the first place.

Reuters reports that, “The world's top energy forecasters look set to cut further their estimates of oil demand for this year as the global economy slips towards its first contraction since World War II, analysts say. The International Energy Agency (IEA), which advises 28 industrialized countries, is due to publish its closely watched monthly report on March 13 and it tends to reflect estimates for world economic growth by the International Monetary Fund. The IMF has steadily cut its 2009 growth forecasts and is bracing for global economic shrinkage this year, as bank lending stalls, factories close and unemployment rises. Even as OPEC cuts US inventories in the world’s largest consumer stand at a whopping 350.6 million barrels 16.5% above a year ago." Oh yes, OPEC production cuts have tightened supplies in other parts of the world but we still have the largest global oil glut in recent memory.

The truth is that the real reason that OPEC is not feeling the economic pain as bad is that the dollar has got up off the floor. No, not demand growth that the self entered, spit on the rest of the world, cartel hoped for but the rally in the rally in dollar. As the rest of the world crumbles economically there is a belief that everything that has happen to the US will soon happen elsewhere and the US is at least ahead of the curve when it comes to fighting the disaster. As bad as things are here the rest of the world is worse so the dollar will remain strong against the rest of the world. A strong dollar that OPEC gets paid in when they sell their dollar means they will be able to afford those fancy meals at those fancy Vienna hotels. Despite OPEC’s best efforts to screw up the world economic recovery, it seems that the US is coming to the rescue to save the cartel from themselves as they achieved this goal really through no actions of their own and not because they help stabilize the market and created a joyful blast of economic growth but buy the dollar assuming its position of the world’s most stable currency. Yes, the dollar may get beat up today after the employment report but that will be short lived. The first cut may be the deepest but the next cut will probably be OPEC’s last.

Now recently the oil market has taken heart by the increasing levels of gasoline demand that we have seen in recent weeks. Yet sometimes these weekly demand numbers might not be all they are cracked up to be. That was a gas crack by the way in case you missed it. David Bird of Dow Jones reports that, “Amid lower pump prices, U.S. gasoline demand is stronger than it was at its weakest levels last autumn, but probably not as strong as suggested in data showing a 2.2% year-on-year rise in last four weeks.” Mr. Bird goes on, “The EIA, the independent statistical and analytical wing of the Energy Department, reported Wednesday that gasoline supplied to the market - a proxy for demand - in the four-weeks ended Feb. 27 averaged 9.032 million barrels a day, a rise of 2.2%, or 192,000 barrels a day from revised year-earlier data. That four-week growth figure would be the biggest increase since April 20, 2007, when demand rose 2.3% from a year ago.

Bird continues “Complicating matters, the EIA analysts agreed with many independent analysts that the four-week figures should be compared to unadjusted figures from the year-earlier period. On that basis, gasoline demand is off by 0.4%, or 33,000 barrels a day, from a year earlier.” Oh no! Another bull bummer! “Industry analysts have questioned the apparent strength in gasoline demand given the current severe economic woes. (I was one of those) Mr. Bird quotes Tancred Lidderdale, an EIA analyst who handles the monthly Short-Term Energy Outlook, said he advocates comparing the current figures to unrevised figures for last year to get a valid comparison. "While we don't necessarily interpret the latest numbers as an indicator that gasoline consumption is now showing sustained growth over last year, the year-over-year declines do appear to be steadily narrowing from the peak last September," he said.

We're short April crude from apprx 4570 - stop 5100.

We're short April heating oil from apprx 12342 - stop 12800.

Sell April RBOB at 13950 - stop 14300.

We're short April natural gas from apprx 437 - lower stop 433.