pJan 5, 2009 (WALL STREET JOURNAL) -- As the U.S. seeks to stockpile oil, China has been doing the same, observers say, and is expected to quicken the pace -- a development that already may be helping to boost oil prices./ppOn Friday, the U.S. Department of Energy said that amid low oil prices, it aims to fill the country's Strategic Petroleum Reserve to capacity this year./ppThat news followed a rare public statement last week from China's top energy official, Zhang Guobao, head of the National Energy Administration, in the People's Daily newspaper that China should take advantage of the falling global energy demand to increase its oil reserves. Mr Zhang said China will quot;encourage companies to utilize idle storage capacity to increase inventories.quot;/ppOil prices have been rising lately. On Friday, oil closed up 3.9% to $46.34 a barrel on the New York Mercantile Exchange./ppThough China doesn't disclose its oil inventories ...

This market is so wild, so volatile, that I’m calling it the “Andy Warhol market” — everyone gets a turn to be right, but only for 15 minutes at a time! And right now, there are massive forces lined up that could thrust stocks and commodities to the moon … and an equally formidable array of triggers that could send them tumbling lower. The stocks I’ll leave to others … But let me show you the forces that are pushing around gold and oil. Plus I’ll give you four ways to play these wild swings. Gold-ilocks and The 3 Bears I’m generally bullish on gold, so it’s good to acknowledge the bearish forces as well. While total gold demand rose 18% in the third quarter, the fourth quarter was when ...

OPEC agreed today to reduce production by 2.2 million barrels a day, the largest cut ever done by OPEC, they are doing everything to prevent oil prices from falling.  How low can oil prices go, more importantly, which stocks to play? Greed.  Oil.  Money.  They all go hand in hand. “We want non-OPEC countries to contribute, and ...

When oil hit $147 a barrel this summer, hedge funds were feeling the heat as big media and big government pointed to the speculators as the real culprit in the price run-ups. The only people who weren’t complaining about oil hedge-fund traders, it seemed, were investors who held shares in clean-energy companies. But times have changed…

The higher oil rose, the more valuable their green portfolio grew. Making money in alternative energy was a fait accompli.

Well, the wheel has turned, pretty quickly in fact, so now the green contingent can blame those dastardly hedge funds for their own reversal of fortune.

The credit crunch has forced many hedge funds to get out of the oil trading business. While it’s difficult to say exactly how much oil inventory hedge funds controlled in the heydays of 2008, today their influence has waned along with tighter credit.

When we talk about oil and the laws of supply

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Energy and Capital
“Is the world suddenly losing its appetite for oil and natural gas? No, demand is still higher than ever before. Although the rate of growth is slowing somewhat due to record prices, demand in Asia and the Middle East is still red-hot and will continue to outweigh declining demand in the US and Europe…So what’s the deal?

The recovery of the dollar, however illusory, is the main factor taking down the price of gold, oil and other commodities. As I have said here more than once, the daily news about oil inventories, demand levels, even pipeline attacks isn’t nearly as important as the valuation of the dollar. (And no, it’s still not because of the evil speculators.)…

The reason is simply that when traders have lost confidence in the stock market, they fly to the safety of commodities, energy and gold. When confidence returns, they fly right …

In ancient times, when mapmakers came to uncharted territory, they would scrawl: “Here There Be Dragons.”

Flash-forward to the 21st Century; oil markets went into uncharted territory on the charts last week. Friday’s dramatic spike up was the biggest one-day move EVER. Morgan Stanley now predicts that oil prices could hit $150 per barrel by the 4th of July.

The dragons are coming to dinner. Are Americans on the menu? More specifically, are you? Today, I’ll answer those questions and more.

Let’s start with …

How This Crisis Differs
From Past Oil Spikes

If you remember the last two oil crises — in 1973 and 1979 — you might be thinking: “well, these things end eventually.”

Maybe so, but there are big differences between then and now….

A year ago, the prevailing forecast was for oil prices to decline to the mid-50’s for more than a year. Opinions have changed in the face of the reality of high current prices.

Natural gas, which was at historic highs, was used as justification for utility companies to obtain rate increases for their electricity and natural gas customers. Gas has managed do come down considerably since then. We won’t hold our breath expecting those same utility companies to request rate decreases now that gas prices have declined.