Central Valley Cooperative

Energy – higher with Iranian threats – IEA cut oil demand – Natgas bouncing higher – API later. The energy complex trade is trading higher as the dollar fades a second day. More economic threats are nipping at the heels of the bulls as the IEA dropped global oil demand forecasts as they released that global oil demand fell for the first time in the fourth quarter since the 2008 economic downturn. They warned of “the rising likelihood of a sharp economic slow-down, if not an outright recession” that creates the real possibility of zero oil demand growth in 2012. 4Q global oil demand dropped 300,000 bpd with most of the decline coming from North America. Looking forward, they warned oil supply could be challenged with the potential sanctions against Iranian oil along with threat of closure to the Strait of Hormuz. Iran continues to be the supply threat to the global oil market and proving support to this market. Threats to close the Strait of Hormuz and warning Saudi Arabia not to make up their embargoed oil continue to stoke the bull’s momentum. Saudi officials claim they can increase oil production 2.0 million bpd almost immediately. Greece continues to negotiate with bankers and investors to improve their debt problems. Crude oil continues to hold over $100 support level with yesterday drive higher. Bearish economic warnings are plentiful, but Iran continues to keep the barrage of threats high enough to keep global oil supply threat real.