This post is a guest contribution by Dian Chu*, market analyst, trader and author of the Economic Forecasts and Opinions blog.

Last Friday, US crude oil futures finished above $78, the highest level in a year, surging more than 9% during the past week making it the largest weekly gain since the height of the summer driving season, even though the US continues to sit on ample supply of petroleum.

Given the continued sluggishness of the economy, high unemployment rate and large amounts of excess oil production capacity around the world, analysts said a sudden upward spike was still unlikely, while others are predicting an immanent correction down below $70.

However, if you take a closer look, it is evident that the current crude oil market is almost entirely detached from fundamentals. Furthermore, there are several factors supporting oil rising to new levels, as fundamentals are

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This post provides links to a number of interesting articles I have read over the past few days (while touring through Europe) that you may also enjoy.

• Gary Stix (Scientific American): The science of economic bubbles and busts, July 2009. The worst economic crisis since the Great Depression has prompted a reassessment of how financial markets work and how people make decisions about money.

• Matt Taibbi (Rolling Stone Magazine): The great American bubble machine, July 9-23, 2009. From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression - and they’re about to do it again.

• Bill Gross (Pimco - Investment Outlook): “Bon” or “non” appétit?, July 2009. Investors who stuffed themselves on a constant diet of asset appreciation for the past quarter-century will now be

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Deputy Energy Minister Sergei Kudryashov has lamented Gazprom's slow sales during the period of high gas prices as a mark of 'incompetence'.  Gazprom expects export sales to fall to $40 million in 2009.  A Natural Resources and Environment Ministry official has said that guidelines for foreign companies accessing oil and gas in Russia should be changed so as to ensure foreign investors are not deterred.  Lukoil has revealed that bank VEB owns roughly 2% of the gas company.  Bloomberg comments on the fact that if talks to reduce nuclear weapons between Russia and the US succeed, a large amount of stockpiled uranium will come onto the market.  Russia's pipeline operator, Transneft, may use its loans as part of an oil supply deal to pay debts it owes to Sberbank.  Russia's competition watchdog has said it ...

Let’s be honest, as drivers and consumers, we hate hearing news that the price of oil is rising. Higher crude prices mean high gas prices and a little more of a pinch every time we head to the local gas station. Fortunately, there is a way to ease the sting of higher gas prices and even profit from them. Oil services stocks are deeply tied to the price of oil when it comes to stock performance, and since the price of oil is on the rise, now may be the time to take a look at this sector.

And don’t worry if you don’t want to individually own all of the names mentioned in the following article, because there’s an ETF for you. The Oil Services HOLDRs ETF (AMEX: OIH) holds all of the names we’re going to highlight, and many more.

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“Global Demand for Oil to Plummet,” screams a recent Financial Times headline.   Huh?  No it won’t.  Who are they trying to kid?

Global oil demand is not going to “plummet.”  And for the FT to say so is just plain silly, if not irresponsible.  OK, I know.  There’s an old saying that they teach in journalism schools.  “You have to sell newspapers.”  But this declaration by the FT highlights the perils of letting a headline-writer do your thinking for you.  It’s what I call “arguing a screaming conclusion.”  And a wrong conclusion at that.

Oil Demand – Down, Then Up

But let’s move past the headlines.  The Financial Times article explains that the World Bank has just issued a new study.  The World Bank believes that the world is entering into the toughest economic times “since the Great Depression.”  Thus overall world oil demand may fall by about half a million barrels per

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Job market takes another turn for the worse… unemployment data at 26-year high… Government solution:spend… budget and trade deficits swell more than expected… Byron King on falling oil demand… and what it means for long-term investors… Gold soars… Ed Bugos with some fresh price targets… Signs of the times… Chinese bank opens in U.S., world’s biggest LBO collapses… Plus, Chris Mayer on the automaker bailout

Americans filed over 573,000 jobless claims last week — the most since 1982.

The Labor Dept. also said the number of people collecting unemployment reached a 26-year high too, 4,429,000.

Unfortunately, we’re just getting started if a study released this morning by UCLA is accurate. The Anderson School of Management predicts we will see negative GDP for the current and first two quarters of 2009… and the unemployment rate to

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The Fed’s first credit crisis lawsuit… who’s suing and why, AmEx, Fannie Mae unload more financial follies… government “fixes” problem with more taxpayer dollars, Chris Mayer with a credit crisis byproduct (and opportunity) that could affect the entire world, China announces big stimulus plan… so why did commodities fall? A hefty chink in Dubai’s armor, Plus, Dan Amoss with a once-favored investment theme due to be back in the spotlight soon

Here’s a curious development that may be worth watching: Bloomberg is suing the Federal Reserve.

Last week, we took a look at the Fed’s bulging $2 trillion balance sheet. And if you’re a long-suffering 5 Min. reader, you know our futile recounting of the weekly Fed lending programs… all the abbreviations and acronyms: TAF, TSLF, PDCF, CPFF, TARP, etc.

Well, the folks at

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Now that crude has lost 50% (and counting) since July, Andrew Gordon says the political will to develop alternative energy sources may be waning. But election favourite Barack Obama is fully behind clean energy. Andrew says this makes strong companies with new technology in biofuels, alternative energy and clean coal a good speculative buy. Another options is this Global Alternative Energy ETF (NYSE:GEX).

This from Investor’s Daily Edge:

John McCain is a practical guy. He subscribes to the “let’s try anything that works” theory. He’s willing to go with anything that weans the U.S. from Mideast oil. Nuclear, biofuels, ethanol, sun and wind, the traditional oil and gas hydrocarbons, tried and true coal and super-clean thermal and hydro energy – they’re all on table.

Throwing up a dozen tar balls and seeing what sticks isn’t much of a policy. But I see nuclear

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Summary Sofame custom-engineered and manufactured systems improve the efficiency of existing gas fired boilers, reducing fuel costs and greenhouse gas emissions. The increase in energy prices has made such savings more attractive. New management has overhauled business practices and has set extremely ambitious sales targets.

Key points:

The key is execution. Management’s ambitious marketing plan 2009-2013 envisages a substantial step change in the company’s fortunes. Ultimately, the company’s valuation will be dependent on the ability of management to execute this plan. Although we have evidence of an extensive prospect pipeline over the next two to three years, before we feel comfortable in projecting such numbers as revenues, we need to have evidence that the pipeline is being transformed into firm orders. Hopefully this will become evident over the next few quarters, when we can re-evaluate our assumptions. As such, our scenario analysis captures this caution, whilst mindful that even the best laid plans can receive unexpected setbacks. On the basis that the

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ZAP, a groundbreaker in electric transportation, announced that a growth in demand has resulted in unaudited, record-breaking August sales of $737,000, an increase of $345,000, or 88 percent, from August a year ago. The sales occurred in ZAP’s Advanced Technology Vehicle division, and CEO Steve Schneider cited high gas prices and lack of electric vehicle competition for driving sales figures to new heights. Currently, ZAP has delivered more than 100,000 electric and advanced-technology vehicles to more than 75 countries.

ZAP was founded in 1994 as Zap Power Systems, which was later simplified to ZAP in 2001. It has two primary businesses, the first being its Advanced Technology Vehicle division, with its 2006 premier - the imported Xebra Sedan and Truck - taking the world stage.

Its second business, the battery recharging technology division (aka:Recharge-It-All), focuses on powering a wide range of consumer electronics, like, cells phones, MP3 players, digital cameras, camcorders,

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