| Tuesday Morning, August 12, 2008 As we have continued to suggest the downside correction is not yet over as prices remained on the defensive both yesterday and into this morning. Russia has ended the military incursion into Georgia as Russian President Medvedev said Georgia has been punished and their military is in disarray. Although the energy markets did not react bullishly to the conflict the end of it is helping to pressure prices a bit in overnight trading. In addition the dollar continues to firm. The dollar is currently trading at levels not seen since early Feb, 2008 when Nymex WTI was trading around $100/bbl or so. The dollar has breached several key resistance levels over the last week or so and appears to be on its way even lower level. As shown in the following table the oil correction and the dollar recovery are well in place. Since mid-July the dollar (versus the Euro) has appreciated almost 7.25% as oil has declined over 20%. As we discussed yesterday the spec community on the Nymex are now at their lowest net long position for oil since early 2007. The investment community seems to now be clearly exiting the oil & commodity complex as the dollar continues to gain strength suggesting the commodity investment play may be over for the moment. | | | | | Downside Oil Correction | | Decline Since Peak on 7/11/08 | | | Change | Change | | | From | From | | | Peak, 7/11/08 | Peak, 7/11/08 | | | $/bbl | % | | WTI | ($30.82) | -21.24% | | HO | ($1.0346) | -24.88% | | RBOB | ($0.7660) | -21.10% | | | Bottom 7/15/08 | Bottom 7/15/08 | | $/Euro | $0.0452 | 7.22% | The IEA released it latest oil market report. The IEA indicated that supply has increased a bit while leaving global demand growth projection unchanged from last months report at 86.9 million barrels per day for 2008. The market has viewed the reprot as neutral as prices redcued their losses a bit after the release of the report. Later today the EIA Short Term Market Outlook report will be released. On the weather front there is a pattern out in the eastern Atlantic that has a high probability of strengthening. The very preliminary estimates show that this pattern could work its way toward Florida by early next week and possibly even into the Gulf. There is another pattern further east that has a medium probability of strengthening with a very preliminary projected path of north into the Atlantic. Neither is a definite threat to energy infrastructure at this point in time but both will be watched by the market and could possibly impact prices later this week or sometime next week if in fact either one strengthens and works its way into the US Gulf. The market sentiment remains bearish on concerns of further dollar strengthening and demand restraint. We expect the market to test the lower support levels shown it the following table and if all remains quiet and the dollar continues its surge we could see these levels breached. Currently prices are mixed as the dollar trades either side of unchanged. | Current Expected Trading Range | Expected Trading Range | | | 8/12/08 | Change | Low | High End | | | | From | End Support | Resistance | | | 8:25 AM | Yesterday | | | | Sep WTI | $114.14 | ($0.31) | $110.00 | $120.00 | | Sep HO | $3.1241 | $0.0046 | $3.0700 | $3.3500 | | Sep RBOB | $2.8635 | ($0.0031) | $2.8100 | $3.0000 | | Sep NG | $8.427 | $0.078 | $8.100 | $8.650 | | | | | | | | Euro/$ | 1.4908 | 0.0007 | 1.4400 | 1.5290 | | Yen/$ | 0.9115 | 0.0007 | 0.8800 | 0.9200 | Best regards,
Dominick A. Chirichella
Energy Management Institute The Energy Management Institute operates a fleet of daily, weekly and biweekly energy publications covering various angles of the energy market, including over a decade of natural gas and power price indexing. In addition, EMI provides higher learning for energy professionals with comprehensive, fully accredited, energy education programs from basic to advanced level. It also provides critical business information services and thought leadership in the energy segments of Oil, Gas, Power, Alternative Fuels, soft commodities and metals. For more info visit our website (www.energyinstitution.org), email EMI at info@energyinstituion.org or call 888-871-1207 To unsubscribe to this report please respond to this email with the word remove in the subject line. Dominick A. Chirichella Energy Management Institute 1324 Lexington Ave #322 New York, NY 10128 tel 646-202-1433 fax 801.383.7510 dchirichella@mailaec.com www.energyinstitution.org This message and any attachments relate to the official business of the Energy Management Institute ("EMI") and are proprietary to EMI. This e-mail transmission may contain information that is proprietary, privileged and/or confidential and is intended exclusively for the person(s) to whom it is addressed. Any use, copying, retention or disclosure by any person other than the intended recipient or the intended recipient ' s designees is strictly prohibited. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution or the taking of any action in reliance on this information is strictly prohibited. If this message has come to you in error, please immediately notify the sender by telephone or return e-mail and delete the original transmission and its attachments without reading or saving in any manner. Thank you. | 
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