The last I posted, I talked about my new favorite pick - Sunoco (SUN). Since then the company has started to bounce nicely and I still believe it has another 5 - 10 points left to go. I wanted to mention some other reasons why I like this position right now. First is that gasoline inventories were just announced yesterday. Estimates were looking for an increase of 1.4 million barrels but fell short of that number receiving only 800,000 barrels.

On top of this, hurricane season started yesterday. Most of the production lines in the gulf are very vulnerable still and still trying to make a recovery from the Katrina & Rita tag-team devastations. What is also interesting is that for a hurricane to disrupt supply, it does not need to be a category 3, 4 or 5. The government mandates all employees and personal working on the gulf oil rigs evacuate from the gulf until the storm passes. This is usually enough to disrupt supply for 3 days assuming no damage is actually done to the rig by the hurricane itself. The hurricane center's forecast is for 13-16 named storms this season, June 1 through Nov. 30. Eight to 10 are expected to become hurricanes, with winds of 74 mph or more. Of those, four to six could be major — Category 3 or higher, with winds of 111 mph or more. Hurricane Katrina, which caused $80 billion in damage and more than 1,570 deaths, was a Category 3 storm.

Oh and did I mention that our problems with Iran are not getting any better and I will be surprised to see this issue solved diplomatically. A strong EPS, PE Ratio and Price Pattern are three more reasons I like Sunoco here. The MAC and Full Stoch. have also turned north nicely and suggest the stock will continue to move higher.

Shares of pipelines (WMB, EP, KMI), services (HAL, BHI), refiners (VLO, SUN), ethanol producers (ADM, PEIX, MGPI, ANDE), E&P (APC, APA, CHK, DVN) have all traded higher lately and I believe this run will continue as institutional money starts making its way back into these sectors for a play on the hurricane season and other reasons mentioned above. As much as I hate to say it - I think gas is going to record highs this year. Hopefully the money I make off Sunoco will be enough to offset these costs.