The energy report for Nov. 5

Change, but can we believe in it? The prices sure changed, yet the oil market does not know what to believe.

Should we believe that this is a change of trend? Is an Obama Presidency bullish or bearish for energy? Yesterday oil soared as the dollar got crushed in anticipation of what would turn out to be an Obama blowout. On one hand, you could assume it was an euphoric reaction to a stock market rally (the biggest in presidential Election Day history) or perhaps the fear that an Obama presidency will mean a return to massive government spending and huge inflation? Well the dollar did not seem to like it as it had the biggest one-day drop against the euro in history and the market continues to try to figure out what this change actually means.

What changes are going to happen? Obama has promised to provide short-term relief to American people facing pain at the pump. Yet if gas prices continue to come down, is that a promise he is going to keep? He has promised to create 5 million jobs by strategically investing $150 billion over the next ten years in private companies to build a clean energy future. Of course that is a noble goal, but it is unclear in what direction the wind will be blowing and who will be the major beneficiary. If you are going to college and you cannot decide on a major, maybe it is easy being green. President Elect Obama says that within 10 years he will save more oil than we currently import from the Middle East and Venezuela. He will start to do that, he says, by putting 1 million electric cars on the road most of which he envisions being built in America. Assuming of course that our car companies make it and that we may actually start buying cars again, which looks today to be kind of a novel concept.

But that is all long term. Today the reality is the global economy is still struggling. There are some signs of recovery. Gas demand according to the MasterCard Survey gas demand fell by 3.9%. Oil can mount a recovery towards $80 if it closes above $72.00.

We're short December crude from apprx 7439 - stop 7230.

Buy December heating oil at 18000 - stop 17600.

Sell December RBOB at 16100 - stop 17400.

Buy Dec natural gas at 515 - stop 500.

Phil Flynn Vice President and Senior Market Analyst Alaron Futures and Options (800) 935-6487

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About the Author

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor.