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 ...

Geo-political tensions are mounting in the global energy game. And that could make investing in oil right now the trade of the year, says Manraaj Singh. Buying shares of oil majors is a good move now. But Manraaj says quality mid-sized oil companies are best placed to return big profits in the next oil bull run.

This from Fleet Street Invest:

Israeli tanks have just rolled into Gaza…Almost three thousand miles away, Nigerian separatist blew-up an oil pipeline over the weekend…Meanwhile, Russia is locked in a dispute over the price of gas with Ukraine. Today they stopped deliveries of natural gas to Ukraine, Turkey and Europe to force the Ukrainians to pay up…

While fears about political instability drive the price of oil back up again, the OPEC oil barons are tightening the screws on global oil supplies…Oil was trading at just $35 per barrel on Christmas Eve. It’s over $50 this

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div align="justify"Back on December 7th I noted that em'the probability of a very dramatic rally in equity markets of 20% in coming weeks is high and rising, taking the Dow over 10,000 again'/em and I stand by that view, implying up to 1100 on the Samp;P. emstrongThe mountain of cash on the investment sidelines (about $8.8trn) earning a minimal return in Treasuries and money market funds as the Fed cudgels conservative, prudent savers and marches them up the risk curve/strong/em, will get redeployed over coming weeks as confidence in the rally and recovery momentum grows. I also suggested that long term energy exposure was attractive, as the oil price had undershot to the downside unsustainably, and that view is now being vindicated by strong sector performance. However, make no mistake, emstrongthis bear rally which will run maybe 33-40% from the November lows will be a wonderful opportunity to raise cash ...

A new poll of 11 economists shows that economists expect real economic growth in Saudi Arabia, the United Arab Emirates and Kuwait to slow - but remain positive!br /br /The good news is that the sconomies are still expected to expand. What is clear, however, is that the Gulf is sensitive to the oil price. Obviously, a fall in oil prices from $147 a barrel to $34 a barrel has an impact. br /br /The forecasts are for real growth of 2.4 percent in Saudi Arabia, 2.7 percent in the UAE and 3.5% in Bahrain. Qatar, the world's top exporter of liquefied natural gas, is expected to see the fastest GDP growth next year at 9.5 percent!br /br /We will monitor the extent of the slowdown in the non-oil sectors. across the Gulf will be a key element to monitor," said Giyas Gokkent, chief economist at ...

Dollar tanks as Fed cuts interest rates to 0-0.25 pct… Oil traders eye OPEC production decision * SPDR Gold Trust bullion holdings rise again… Gold edged down in Europe on Wednesday as traders took profits after the previous session’s 2 percent gains on the back of a larger-than-expected interest rate cut from the U.S. Federal Reserve.

The market is awaiting fresh direction from the crude oil market, which rose ahead of an expected production cut from the Organization of the Petroleum Exporting Countries (OPEC).

Spot gold was quoted at $855.60/857.60 an ounce at 1024 GMT, little changed from $857.35 an ounce late in New York on Tuesday. U.S. gold futures for February delivery were up $14.70 at $857.40.

Gold is likely to consolidate after recent sharp moves, analysts said.

“We have jumped so much in a relatively short period of time without

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Some commodities are due a strong rebound, says Manraaj Singh. The underlying fundamentals are largely unchanged from July, when many resources were posting record highs. Manraaj says crude oil prices could double by the end of 2009, while agricultural prices will also soar.

This from Fleet Street Invest:

Just a few months ago it seemed like the whole investment world was jumping onto the commodities bandwagon. Now it seems that they can’t jump off fast enough.

The benchmark Reuters/Jefferies Commodity Index has now fallen by 51% from its peak in July (see chart below).

But as I’ll explain in a moment, commodity prices are set for a rebound. And if you are willing to take a longer term view, this is a once-in-a-lifetime opportunity.

Commodity prices reflect future expectations about the global economy. Less business activity and infrastructure spending means less demand for commodities.

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It apears that OPEC is reaching out, in desperation at the current oil price, to Russia. It has asked Russia to consider a cut of 300,000 barrels a day. If Russia joined OPEC, the oil price would certainly react. Indeed, Dmitry br /edvedev has said Russia may join 'suppliers organisations' in the future.

In 1971 a nuclear physicist Ralph Lapp used the phrase “China Syndrome” to describe what might happen in an extreme example of a nuclear power plant meltdown. His theory was that the molten core of the reactor might be so hot and toxic that it would burn through the floor of the power plant and sink through the earth’s crust before exiting the other side of the earth through China.

This has never happened in the various nuclear accidents, but it’s a powerful idea that spawned the 1979 movie called The China Syndrome, which was released just 12 days before an accident at the Three Mile Island nuclear power plant in Pennsylvania.

I only mention it because the idea captures quite nicely the potential economic impact here of a Chinese economic slump. New Zealanders underestimate the impact of Chinese economic boom on the global economy generally and on our own economy.

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The deteriorating global economic scene is continuing to weigh on the outlook for oil demand. And while there are other forces at play as well (the financial crisis and dollar's strength, to name just two), the shaky foundation of the commodity's demand has been the most significant factor in the roughly $100 fall in oil price since July '08.

Given this backdrop, recent projections from the International Energy Agency (IEA) and the Energy Information Administration (EIA) provide useful data points. The former is the energy watchdog of the Organization for Economic Co-operation and Development (OECD), while the latter is basically the statistical arm of the U.S. Department of Energy.

Here are some of the key points from both reports.

Both the agencies see global oil consumption falling in 2008 -- the IEA expects total global consumption to drop by 200,000 Bbl/d [barrels per day], while the EIA is looking for ...

div align="justify"A blind monkey throwing darts would beat the average investment bank oil analyst, whether forecasting weekly inventory levels or the future oil price. At the peak of the historic investment bubble in oil futures back in July, they were falling over themselves to predict $170-200 oil in 2009. Now it's $25. Everyone from central bankers to the CFTC and leading economists (or 'misleading' economists as people like Paul Krugman should be labelled) claimed the price was based on fundamentals. They were wrong then, and they'll be wrong again. Back in May in a href="http://deadcatsbouncing.blogspot.com/2008/05/its-oil-price-stupidbut-for-how-long.html"span style="color:#cc0000;"It's the Oil Price Stupid, But for How Long More?/span/a (and right through the July peak) I was resolutely contrarian and wrote: /divdiv align="justify"em'Far from worrying about $200 a barrel oil in the foreseeable future, I would stress test my portfolio for sub $100 oil, which is far more likely from these levels. At a ...