Welcome to Energy and Capital's new weekend review. Each week we'll take a look at the week that was and what's ahead, along with what you may have missed form our free sister sites, Wealth Daily, Gold World, and our free blogs. Enjoy.

 

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It's no longer oil fundamentals driving prices. Geopolitical tensions and a historically weak dollar are doing a fine job of jacking prices.

If black gold were trading on fundamentals, we'd see sub-100 oil. The U.S. Energy Department's Energy Information Administration just reported that crude inventories rose by 3.2 million barrels, or 1%, to 308.5 million barrels.

While it's lower year over year, it's still well above the 2.4 million barrel expected gain. It's the seventh month that we've seen a gain in inventories, meaning that the U.S. has enough oil to quench demand.

 

 

Gasoline inventories were up by 2.3 million barrels to 232.6 million barrels.

But like I said, oil isn't trading fundamentally. Here's why.

As oil spikes above $101, predictions of $4 a gallon gasoline could become crude reality by spring. Be prepared. Crude is rebounding strongly, rising more than $2 a barrel to new records, as a historically weak dollar and the prospect of lower interest rates attracted even more money flow to oil markets.

Instead of viewing 0.6% Q4 GDP growth, coupled with rising unemployment numbers, as a negative, investors are using it as fodder for further interest rate cut arguments. As interest rate cuts weaken the dollar further, crude futures offer traders a hedge against the falling dollar. And oil futures bought and sold in U.S. dollars are more attractive to foreigners as the dollar plummets.

Not helping, there was an attack on Italian energy company, Eni SpA's Brass River in Nigeria, cutting production of 50,000 bpd. And, while there's fear surrounding next Wednesday's OPEC meeting, an output cut may be unlikely if prices don't fall.

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For the week of February 25, 2008, here's what we covered ...

The 3 Hard Truths Facing the World... and Where the Money Will Be in Energy
Nick Hodge explains the reality of Grid Parity... and the bright future in renewable energy. Says Hodge, "Recent developments in renewable energy mean that solar is already achieving cost parity in locations that don't have easy access to fossil fuels... Hawaii is the perfect example. And just so you know I'm not making it up, here is a quote taken right from the BP(NYSE: BP) website: "In the USA, parity with the electricity grid at peak charging rates has already been achieved in northern California and Hawaii."

Investing in Nuclear Energy: 104 Reasons behind the Nuclear Energy Revival
Keith Kohl looks at the role nuclear energy will play in our world's future energy demand... and the best investing angles going forward. Says Kohl, "There are approximately 104 nuclear reactors operating in the U.S., accounting for roughly 20% of the total electricity we generate. If you really want to see where this industry is headed, just look at what we have planned for the future."

Investing in African Platinum: 2 Ways to Profit from South Africa's Energy Squeeze
"South Africa leads the world's platinum producers, with 80% of all international production and 88% of recoverable reserves (former Soviet states hold most of the rest). But for at least five days in January, the country's gold and platinum processors ground to a halt, as blackouts spread across the country due to thin coal-fed electricity supply."

Gold Mining in Chile
"Over 10,000 years ago, migrating Native Americans settled in the long and narrow coastal strip of land wedged between the Andes mountains and the Pacific Ocean in South America, which is now known as the Republic of Chile (República de Chile)."

These Dividend Stocks Will Recession-Proof Your Portfolio
"With the constant drumbeat of bad news battering markets these days, the Federal Reserve now finds itself walking on the proverbial tight rope. And while some inflation hawks would more likely call it a plank, one thing at least seems certain--more rate cuts from the Bernanke Fed. Of course, it is exactly times like this that investments in dividend stocks begin to rise."

The Long-Term Investment on Post-Fidel Cuba
Energy and Capital's Sam Hopkins spoke of 4.6 billion barrels of Cuban oil, saying that even the United States Department of Energy can't play dumb when it comes to Cuba's oil reserves. Though, it's not just oil that has investors drooling.

Here's How to Cash in on New Balkan Banks
National Bank of Greece has sure benefited from taking a European perspective, acquiring majority stakes in regional banks like United Bulgarian Bank that give NBG first dibs on finance-hungry young economies in what used to be Europe's boondocks.

The Energy Trifecta Trades
According to Bloomberg, "U.S. natural gas is the cheapest it's been relative to oil since the 1991 Gulf War, raising the prospect of a windfall for investors who sell crude and buy the other heating fuel. Gas prices will probably rise because inventories are at a four-year low and below-normal temperatures are stoking demand... At the same time, he said, an increased supply of oil and a slowing U.S. economy will drag crude prices lower." Here's how to play it.

How to Profit from Recent Carbon Market Developments
According to Nick Hodge, "I told you a few weeks ago that the world greenhouse gas credits market grew 80% last year. But for an industry that now has a $60 billion price tag, we haven't really been hearing too much about it. The last week, however, has provided some insights about where the industry is heading and how investors like you can position themselves to get a piece of it. Here are the most recent carbon market developments concerning the international and domestic spheres."

Wall of Worry: Tide of Bad News Rises
"Sometimes people ask me why I'm so negative these days. My answer, of course, is pretty simple," says Steve Christ. "When the data stops being so negative, I'll be more than happy to turn positive. But until then I just can't ignore it. That to me would be foolish."

That's it for this week. For more, visit your free EnergyandCapital.com, GoldWorld.com, and WealthDaily.com.

Have a great weekend,

Ian L. Cooper
http://www.energyandcapital.com

 

"Energy stocks... The only way a human is going to make any money."

-- Matt Simmons, Peak Oil's first and most vocal proponent,
and founder of the country's last pure play energy investment banking firm.

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Wish it was $4, gas (petrol) in the UK is more than £1.05 per litre ($7.88 per US gallon). We are experiencing now what you have to come.

Enjoy your good fortune while it lasts.

The second paragraph's reference to the U.S.' currently ample oil inventory as a reason why the price of oil should be lower implies that the U.S. is the only nation using oil. More pertinent is the state of worldwide inventories versus (increasing)worldwide demand. Also, in the next to last paragraph, you mention traders are using crude futures as a hedge against the falling dollar. But I believe that a more direct cause (and explanation) of crude's rising cost is global oil producers rightfully insisting (by limiting production) that crude's price must inversely rise as the value of the US$ falls. If you disagree, compare a 7-year chart of the falling US$ with that of crude's increasing price.