The trade deficit in July came in at $32.0 billion -- a significant increase from the $27.5 billion in June. The consensus expectation was that it would be close to unchanged. Since the trade deficit is a direct input into GDP (net exports), this will moderately reduce the expected growth rate for the third quarter. There was, however, some good news in the report: both imports and exports rose, imports just rose faster. Trade now seems to be in a sustainable uptrend, after falling off a cliff in the second half of last year and then stabilizing in the spring. This can be seen in the first graph below (from http://www.calculatedriskblog.com/). A year ago, the trade deficit peaked at $64.9 billion on much higher levels of both imports and exports. The world-wide slowdown has dropped our exports by 22.4% from $164.4 billion to $127.6 billion this year, ...

The U.S. news media has convinced many investors that oil consumption is falling because of the global recession. While that may be true, it’s a disservice to millions of investors because production is declining at a pace that’s actually three times faster. And that suggests higher oil and gasoline prices in coming months - perhaps as much as 50% - 70% higher, or more - particularly if a U.S. economic recovery is truly in the offing. To really see what I’m talking about, let’s start with a close look at consumption. I’m asked about this frequently in my global wanderings, most recently at the Las Vegas Money Show last week. For months we’ve been hearing about a drop in global demand. It’s a popular story and one that sounds credible: After all, it seems logical to assume that during economic chaos, consumers and businesses alike will ...

How did it get here, and where is it going? What a difference a year makes. While March lions and April showers were at work in 2008, so were these factors in the U.S. and global economies:

The Dow Jones Industrial Average remained steady above 12,000. The leading indicator of existing home sales was down over 21% from the previous year, and the official unemployment rate was just beginning its upward creep by crossing the 5% mark. The first official admissions of the “R” word. In early April 2008, the International Monetary Fund (IMF) declared a 25% chance of a global recession, and Federal Reserve Chairman Ben Bernanke told Congress that gross domestic product “could even contract slightly.” The novelty of bailouts began. Bernanke also assured Congress that the Fed’s emergency authorization of a loan against $29 billion of Bear Stearns assets wasn’t putting taxpayer money at risk: “I feel reasonably confident that ...

Exxon Earnings Weaker than ExpectedExxonMobil Corp.'s (XOM) first-quarter 2009 earnings came in modestly below expectations, but the company raised its quarterly dividend and maintained its share buyback rate of the last few quarters. With a cash balance of around $25 billion and a pristine credit profile, Exxon remains better positioned than any other company in the world to navigate the current downturn.Exxon raised its quarterly dividend by $0.02 per share to annualized run rate of $1.68 per share, the 27th consecutive year that it has raised its dividend. The company remained active on the share buyback front as well, maintaining its quarterly repurchase average of around $7 billion. The company guided towards a buyback rate of $5 billion for the second quarter and refused to give any color on this vital front going forward. While dividends and capital expenditures are not expected to drop ...

Exxon’s Earnings Peaked Last Year, But Will Bottom in 2009Earlier today, ExxonMobil (XOM) reported better-than-expected fourth-quarter 2008 earnings of $1.55 per share or $7.8 billion, down from $2.13 per share or $11.7 billion in the year-earlier quarter. The steep fall in oil prices caused a more than 47% drop in earnings from the preceding quarter. For the full-year 2008, total earnings were a record $44.1 billion, up from $40.6 billion in 2007.Exxon’s earnings follow oil prices. And since the price of oil is not expected to get anywhere close to its summer 2008 peak anytime soon, we can safely say the same about Exxon’s earnings as well. Exxon’s earnings and cash flows peaked in 2008, but will most likely bottom in 2009. Given the unfavorable macro backdrop, Exxon’s total 2009 earnings could be about half of its 2008 record, with the outlook improving in …

In the energy market on Friday, oil initially dropped but then busted back to the upside, with crude for February delivery closing at $46.34/barrel, up $1.74 from the short Wednesday session and $7.31 from Tuesday. February reformulated gasoline gained 8 cents from Tuesday, to $1.1105/gallon.

Analysts cited a convergence of factors, including a Russian move to cut off natural gas to Ukraine, the ongoing conflict in the Middle East, and OPEC’s projected production cuts.

“A new mood has greeted the early days of 2009 and one that is not so gloomy,” said Phil Flynn, of Alaron Trading.

The Energy Department provided a boost, too, saying yesterday that it will take advantage of low oil prices to buy oil for the 727 million-barrel Strategic Petroleum Reserve, and fill it in 2009. The energy agency said it has issued a solicitation to buy about 12 million barrels of crude oil for the

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It was cloudy in the Algerian city of Oran on Wednesday…and a fairly pleasant 14 degrees in the open air… But the assembled leaders of the OPEC oil exporters’ cartel must have been feeling rather hot under the collar. Since hitting a peak of $147 in July this year, the price of oil has fallen by about $100. That has put the oil exporting countries under a huge amount of pressure. And now they are determined to drive the price of oil back up again.

Global oil production is set to fall sharply

On Wednesday, the cartel announced that it will slash daily oil production by 2.46 million barrels a day. That’s OPEC’s biggest production cut ever. What’s even more extraordinary is that some of the big the non-OPEC producers are now coordinating their production cuts with the cartel.

The Russians attended the OPEC meeting and they may cut announce their own

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Basic Earth Science Systems, Inc. today reported its operating results for the 2nd Quarter ending September 30, 2008. Basic Earth is an independent oil and gas exploration company. Benefitting from higher oil and gasoline prices earlier in 2008, net income rose to $946,000. Oil and gas revenue was $2,697,000. Compared to the same period in 2007, net income was 120% higher and sales revenue was 51% higher.

Asked to comment on the company’s impressive results, Basic’s President, Ray Singleton, said the “combination of high commodity prices and the effect of our new Colorado wells coming on production have certainly supported the results of our second fiscal quarter.” According to Singleton, Basic Earth recognizes that declining oil prices will have a direct impact on future operations. However, he said Basic Earth has prepared a plan for this scenario based on prior experience.

Noting the company has faced

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