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THE REAPER
P.O. Box 84901, Phoenix, Arizona
(October 23, 1997) ENERGY COMPLEX: The supply/demand energy margin is so tight in the United States that any potential supply disruption will lead to a price shock and soaring energy prices, particularly if a flare-up occurs in the Middle East. Iran continues to beat the war drums. The heir apparent in Saudi Arabia is less friendly to the United States. Natural gas is a leader in the complex. Natural gas futures are being strengthened by low inventories of coal and competing fuel. Forecasts for cold weather are strengthening natural gas prices. Fifty-four million Americans heat their homes with natural gas. Heating oil and crude oil will tend to move up as we encounter harsh winter demand. Unleaded gas stocks are relatively low.
RECOMMENDATION–Futures investors who purchased December 1997 and 1998 crude oil call options–hold. Partial profits taken. Futures investors profitably long January natural gas use $3.27 open protective stops to lock in huge profits. Take partial profits on strength.
R.E. McMaster, Jr.
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