energy stocks to run?

  1. 181 Posts.
    Energy Stocks Looking Good?


    "Flynn's Energy Report


    Phil Flynn
    Tuesday September 30, 2003

    What a frosty reception. A chilly wind has begun to blow and winter's first taste has left energy traders feeling a bit cold. Reports of below normal temperatures and early frost caused prices to rally across the board. Already tight supplies and the fear that cold temps will hit early and often caused a fair amount of short covering and new speculative longs to come into the market. Nowhere more apparent than in natural gas where prices surged ahead $2.74 per mmbtu! So was it just the cold that caused the massive rise or was it the cold cuts of OPEC? It could be more than Mother Nature influencing the markets, it could be the economy.

    According to an article written by Andy Weissman, critical data released by the Dept of Energy seems to suggest industrial demand for energy is stronger than previously thought for. Mr. Weissman reports in June, 2003 natural gas use to generate electricity declined a remarkable 133.9 billion cubic foot as compared to June, 2002. This decline at first blush might indicate industrial demand had fallen. But when looked at more closely, that's not the case. It may be a direct result of cool weather in June. According to Mr. Weissman it suggests that the level of industrial fuel switching and other industrial fuel destruction that occurred after the end of last winter's heating season in all likelihood was much lower than thought for. So in other words, when it gets cold the competitive demand for energy could cause a spike in price. So after explaining it wasn't just the recent cold pushing prices higher we see it was also the cold winds of June.

    Is OPEC still getting a cold shoulder from non OPEC producers? If non OPEC producing countries cooperate, prices will stay strong. The non OPEC producers benefit from high prices without cutting their own production. OPEC is now making threats they'll let the price fall unless non OPEC countries cut as well.

    The energy markets may be turning the corner. We've been recommending for the past few weeks to put on bullish option strategies and they're looking pretty good on natural gas and heating oil."
 
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