The Energy Report for Monday, September 8, 2008
Welcome to the United States of Fannie and Freddie. Guess who owns Fannie and Freddie? You do!
The US took over Fannie and Freddie and so far the market likes it. Paulson said that they have a responsibility to halt the systemic risk that could be caused by the collapse of these government sponsored entities. The US plans to pump in over 200 billion dollars in capital into Fannie and Freddie in the hopes that America can still get a home and any other kind of loan.
In the meantime, back in the oil patch, oil has to deal with Ike. Ike is single handedly supporting oil against the backdrop of softening demand.
That softening demand creates a new set of problems with OPEC that has to deal with engineering a soft landing in energy prices but at the same time not make things worse by keeping prices too high and kill off even more demand. Dow Jones reports that Saudi Arabia and its Gulf Arab allies would be ready to defend an oil price of $80 a barrel if the market continues to fall this year, quoting the Middle East Economic Survey. MEES said that even if oil prices don't fall that far before year end, looming supply/demand imbalances are likely to justify action. Growing signs of weakening Chinese demand following the end of the Olympics are sure to impact on oil-production deliberations by Saudi Arabia, China's biggest crude supplier. The bottom line is OPEC won’t be able to justify a production cut unless oil falls below $100 a barrel.
And that may be possible if Ike fizzles out. We can only hope.
Do you have the Fox Business Network Yet? Well what are you waiting for! See me today on Fox Business. We will get you on the Phil Flynn Energy blast well! And don’t forget to call for your future and option updates! Yes, we do day trades and trade options! Call me at 800-935-6487 or email me at pflynn@alaron.com to open your account!
Sell October crude at 11060 - stop 11260.
Sell October heating oil at 32300 - stop 32500.
Sell October RBOB at 29500 - stop 29700.
Buy October natural gas at 690 - stop 670.
Have a GREAT day!
Phil Flynn
Alaron Research Team
800.935.6487
pflynn@alaron.com
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