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Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide. Now you can get this highly sought after analysis with your daily research newsletter from Phil Flynn. Learn more about this complimentary offer and sign-up today.

Remember when President-elect Barrack Obama was going to take the money away from the evil oil companies and take those profits and spend it on alternative fuels? Well it seems that those ideas are gone with the wind. Or is it gone with the wind farms? The Houston Chronicle reports that President-elect Barack Obama has quietly shelved a proposal to slap oil and natural gas companies with a new windfall profits tax. The Chronicle says that an aide for the transition team acknowledged the policy shift Tuesday, after a small-business group discovered the proposal - touted throughout much of the campaign - had been dropped from the incoming administration's Web site. "President-elect Obama announced the policy during the campaign because oil prices were above $80 per barrel" the aide said. "They are below that now and expected to stay below that."

So it appears that when President-elect Obama talks about change you can believe in, what he really meant was he'd be changing his position on every issue after he secured the election. It's not a bad change on this issue because he realizes that a windfall profit tax always hurts the average American. It will cost US jobs and outsource our energy security to other countries. But as we're seeing from his cabinet picks, from Gates to Clinton, it appears change is not so much change as it is a state of mind! Cheaters never prosper. Well at least not in the long run anyway. Did OPEC just cheat themselves out a few bucks a barrel?

It's entirely possible that's exactly what they did. The market seemed to frown on the lack of compliance from the OPEC cartel that stands now only at 66% and that is a failure in anyone's book.

Oil prices fell as questions about OPEC compliance raised another question on whether or not OPEC can actually follow through with the agreed upon production cut in December. As the OPEC pie continues to dwindle, tensions in the cartel continue to rise. Once again it seems that OPEC likes to say one thing but then go pump another. According to a Reuter's survey OPEC members only complied with 66% of their agreed upon production cut and what Reuters called a, "limited supply cut from Venezuela, Iran."

A limited supply cut from the two biggest hawks in the cartel? The ones that scream the loudest seem to cut the least. Oh yes, they love production cuts as long as they do not have to do the cutting. At the emergency meeting in Cairo last week, Gulf oil producers said that compliance was the key to another production cut. So far that is not happening. How bad was it? Reuters says that total OPEC oil supply fell in November for a third consecutive month. Supply from OPEC fell to 31.2 million barrels per day in November down from 32.17 million barrels per day in October. But the members that are held to quota pumped 28.07 million barrels per oil a day when they were only supposed to pump 27.3 million barrels a day. Tisk, Tisk!

Perhaps oil was also pressured by the fact that the EIA petroleum supply report is expected to show an increase in supply for the tenth week in a row. The EIA shows that crude oil inventories are already well above average range for this time of year and are expected to get larger.

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Can crude oil make it ten in a row? I guess oil will make a ten-peat as US crude supply is expected to rise for the tenth week in a row. Crude stocks are expected to rise by 1.4 million barrels, according to Dow Jones Newswires survey or 1 million if you look at the Bloomberg survey to pad an already well-supplied crude market. As of last week US crude supply stood 6.2% above one year ago levels. We have been seeing huge imports and increasing domestic production as Gulf production that was hampered after Hurricane Gustav and Ike continues to try to get back to normal. A lot of market focus will be on the Cushing, Oklahoma delivery point for crude supply that is at a very high level.

Distillate supply is expected to rise by 700,000 barrels. Supply still a bit below the five-year average and below 5.9% below one year ago levels. This is the soft spot in the complex. The market is concerned that a cold winter will rally heating oil this year. Still those concerns seem to be offset by the fact that refineries are kicking it up a notch and that demand global for distillates will be a lot less. For example take this Dow Jones report that said supplies of gasoline and diesel hit new highs in October in China quoting China's state Media. Supply hit new highs despite China cutting imports "drastically". Which means US exports will be less.

For gasoline it is all about demand. The EIA showed that gasoline demand over the last four weeks, motor gasoline demand, has averaged about 9.0 million barrels per day, down by 2.8 percent from the same period last year. Distillate fuel demand has averaged 4.0 million barrels per day over the last four weeks, down by 2.2 percent from the same period last year. The thing that the bulls are hoping for is that demand will rebound. Still that may matter less as the global slowdown adds to spare capacity and extra supply.

My state of mind is to still sell rallies! Yes, we have not changed, as we are still short after all these months! Are you? If you are not perhaps it is time to get my daily research letters. And seeing that change is the current buzzword, you should change to the Fox Business Network where you can see me every day! If you don't get it then call your cable operator and demand it!

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not assured and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Phil Flynn is Vice President, Energy and General Market Analyst with Alaron Futures and Options and is one of the world's leading energy market analysts. Phil heads the Alaron Energies Futures Brokerage Division offering brokerage services to individual investors, professional traders and institutions. Phil provides up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

Phil and his energy team were one of the first to predict that global crude oil prices would exceed $30/barrel in the year 2000, a correctly predicted market milestone that has highlighted the economic scene in the new millennium. Phil also called the rise of retail gas prices in 2001. Most recently, Phil Flynn has again accurately predicted that global crude oil prices would reach close to $40/barrel ($39.99/barrel) in 2004. Through hundreds of media interviews, Phil Flynn and Alaron Futures and Options have become familiar names in living rooms and boardrooms worldwide. The world's print, broadcast, online media and small businesses have come to rely on Phil's accurate and animated forecasts, analysis, speculative and hedging opportunities.

Get daily research letters from Phil Flynn of Alaron Energies

Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide. Now you can get this highly sought after analysis with your daily research newsletter from Phil Flynn. Learn more about this complimentary offer and sign-up today.