The dollar gave up most of its earlier gain against a basket of currencies, boosting the appeal of oil and commodities to investors. European stocks firmed and U.S. equity futures pointed to a higher opening.

“It’s making some progress back up, largely due to the dollar,” said Rob Montefusco of Sucden Financial. “At the same time, we haven’t seen demand pick up and we need that to draw strength back into this sector at the moment.”

U.S crude was up 8 cents to $66.10 a barrel by 1308 GMT, after earlier falling as far as $65.41. London Brentwas down 11 cents to $65.00.

Iran test-fired a type of missile on Monday which defence analysts have said could hit Israel and U.S. bases in the Gulf region, state television reported.

The drills coincide with increased tension in Iran’s nuclear dispute with the West, after last week’s disclosure by Tehran that it is building a second uranium enrichment plant.

Tensions over Tehran’s nuclear programme have supported oil prices in recent years. The country is the second-largest oil producer in the Middle East.

In late 2008, Iran threatened to block the Strait of Hormuz, through which about 40 percent of the world’s globally traded oil passes, when tensions rose in another row with the United States around the nuclear work.

Even so, sluggish oil demand, reinforced by some lacklustre economic data from the United States last week, continued to command investors’ attention.

“The Iranian situation is not having much influence. If it was, we’d be back towards $70 again,” said Christopher Bellew, a broker at Bache Commodities in London.

Oil prices posted their largest weekly decline in around 2-3 months last week, pressured by government data showing U.S. crude oil inventories had risen, suggesting demand remains weak.

U.S. durable goods orders dropped by the largest amount in seven months while a rise in new home sales was less than forecast, according to data from the U.S. Commerce Department on Friday.

Sept 28 (Reuters)

Oil prices have more than doubled since hitting lows near $30 a barrel at the height of the global economic crisis, but the market has come under pressure since touching a year high of $75 a barrel almost a month ago.

“There will be little or no sustained upward pressure on oil prices until global economic recovery is firmly established and reviving oil demand begins to draw down bulging oil inventories,” analysts at the Centre for Global Energy Studies said in their monthly oil market report on Monday.

“Even next year prices are unlikely to rise much unless clear signals emerge that the world is pulling out of recession in a sustainable fashion.”

U.S. crude for October delivery fell $2.43 to $69.61 a barrel by 1550 GMT, having earlier hit a low of $69.10. London Brent crude fell $2.61 to $68.71 a barrel.

Oil stockpiles have risen around the world as the global economic crisis has cut sharply into energy demand.

The International Energy Agency said on Monday world electricity output was likely to drop this year for the first time since 1945, while Sinopec <0386HK.>, Asia’s top oil refiner, said demand for industrial fuels remains depressed in China, the world’s second largest oil consumer.

“Global oil demand is only slowly picking up and as of right now not at a fast enough pace to move overstocked inventories into a destocking pattern that will push inventories down to more normal levels,” said Dominick Chirichella, senior partner at Energy Management Institute.

Other markets also weighed on oil on Monday, with investors turning cautious ahead of a Federal Reserve meeting and Group of 20 summit this week. Equities were lower across the globe due to uncertainty about the economic outlook.

Oil prices have followed moves in equity markets in recent months as traders try to gauge the timing of a pick-up in global energy demand expected to coincide with the world’s emergence from the biggest economic slowdown since the 1930s.

Lower risk appetite also helped the dollar extend a rebound from a one-year low hit against the euro last week. A stronger dollar tends to pressure commodities priced in the U.S. currency as they become more expensive for holders of other currencies.

Separately, money managers boosted net long positions in the New York Mercantile Exchange crude oil market last week in a bet prices would rise, the Commodity Futures Trading Commission said in a report on Friday.

Sept 21 (Reuters)

U.S. crude for October delivery fell $2.20 to $69.74 by 1:24 p.m. EDT (1724 GMT) after rising to $72.90 in choppy trading. London Brent crude fell $2.10 to $67.76 a barrel.

“Crude put in a high for the week, but there was no follow-through and the dollar and S&P turned around and that helped pull crude back,” said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

U.S. stocks were hampered by profit taking after five days of gains and the longest winning streak since November which helped boost crude prices earlier in the week.

Analysts and traders say that current oil prices reflect attitudes in the market rather than fundamentals.

Data released Thursday by the U.S. government showed petroleum product inventories, including heating oil and gasoline, rose more than expected last week, suggesting lackluster demand.

“Fuel demand has not recovered and the market needs to see some demand after going up on sentiment,” McGillian said.

Data showed China’s crude oil imports in August surged about 25 percent to a near-record high of 19.6 million tonnes or around 4.6 million barrels.

Oil hit a year-high of $75 a barrel in late August, from below $33 in December, as global oil demand recovered.

Crude’s climb mirrored a rise in European equities <.FTEU3>, which were headed for their sixth consecutive session of gains.

Since March 9, equities and oil have traded in close correlation.

At least two rockets were fired from southern Lebanon into northern Israel, prompting an Israeli artillery response, heightening fears of regional instability and prompting earlier crude buying, traders said. No casualties were reported.

The International Energy Agency said that oil demand would rise this year and next as the global economy recovers, although it also said oil stocks in the big developed countries of the OECD were up 4.6 percent in July versus a year ago.

WEAK DOLLAR

The dollar index <.DXY>, a measure of the U.S. unit’s performance against six other major currencies, has dropped 1.9 percent in the past week. It briefly fell as low as 76.548 of Friday, its lowest level since September 2008.

Weakness in the dollar, the currency of the oil market, was a concern for the Organization of the Petroleum Exporting Countries. The group needs higher average oil prices to step up investment in new output, its secretary-general said.

The dollar’s slide has helped boost demand for crude this week, but an analyst at Commonwealth Bank said oil was unlikely to get much more upward momentum from the greenback.

“Our forecast for currencies is for dollar depreciation — a lot of that has occurred already and while depreciation has been an upside driver, that influence may be weakening,” said David Moore, commodities strategist at Commonwealth Bank in Sydney.

NEW YORK, Sept 11 (Reuters)

U.S. light crude fell 95 cents to $65.99 a barrel by 1325 GMT, pulling back from its gains ahead of the release of the economic data.

London Brent crude dropped by $1.43 to $68.68.

U.S. gross domestic product fell 1.0 percent in the second quarter, with consumer spending falling 1.2 percent, the U.S. Commerce Department said.

Although the contraction was smaller than expected the January-March GDP was revised down to a 6.4 precent drop from the previously reported 5.5 percent fall.

With the contraction in the second quarter, U.S. GDP has fallen for four straight quarters for the first time since government records started in 1947.

“The GDP reading did come better than expected, but the stabilisation is coming off a downward revised first quarter number,” Harry Tchilinguirian, oil analyst with BNP Paribas, said.

“Spending is worse than expected so economic activity in the U.S. is still not supportive for oil demand.”

European shares turned negative after the data and U.S. stocks opened weaker.

Oil prices were poised to mark their first monthly fall since January, which is likely to be about 4 percent.

In the United States, the world’s largest energy consumer, crude inventories have risen and oil refinery utilisation rates have remained lower than normal as economics for refining have been poor and fuel demand has been weak.

U.S. crude oil imports in May fell to the lowest level for the month in 12 years. In Japan, the world’s third largest oil consumer, fuel sales fell in June, dropping for the 13th consecutive month.

LONDON, July 31 (Reuters)

U.S. crude futures traded down $1.01 to $63.04 a barrel by 1:13 p.m. EDT (1713 GMT) as investors sought safer havens. London Brent crude fell 74 cents to $63.31 a barrel.

“The worries are that the pace of the economic recovery hasn’t materialized the way that people who plunged into the commodity markets thought, and now they are running for the exits,” said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. “The question is how far they will run.”

Safe-haven currencies such as the dollar gained on the concerns about a potential turnaround to the global economic crisis, while U.S. stocks fell.

Crude prices have dropped from $73 a barrel in late June on worries a rebound in global fuel demand may be far off, after economic optimism helped lift prices from lows under $33 struck in December.

The U.S. Energy Information Administration raised its outlook for global oil demand by 170,000 barrels per day (bpd) in a report released on Tuesday.

“There has been stronger economic activity in Asia than was previously anticipated, and the current forecast reflects higher expected oil consumption in that region,” the EIA said.

Surging demand from China and other developing economies launched oil and other commodities on a six-year rally that sent crude to a record high near $150 a barrel last year, before the economic crisis hit demand.

Weekly U.S. inventory data is expected to show a fall in crude oil stockpiles and a build in gasoline and distillate stocks in the week to July 3, the build up to the long U.S. Independence Day holiday weekend when summer gasoline demand typically peaks.

Data from the American Petroleum Institute is scheduled to be released later Tuesday, with the EIA’s weekly inventory report due out on Wednesday.

Crude has found limited support from OPEC member Nigeria, where militants have launched at least four attacks against oil installations in the past 10 days, helping to underpin prices on Tuesday.

NEW YORK, July 7 (Reuters)

But the renewed interest in ethanol proved to be short-lived, as oil retreated below $20 a barrel just four months later. As a result, many of those smaller ethanol companies couldn’t survive as profitable alternative energy investments.

Flash forward to today, where we’ve seen crude oil prices double in just the past four months. Worldwide oil demand has soared, particularly from fast-growing countries like China and India, and although the global downturn has seen the pace of demand slow, when the global economy gets back on track, it should prove even more bullish for oil.

But there’s another sector that should rise, too…

Rising Oil Prices Spark Interest In Alternative Energy

With oil prices rising again recently, it’s sparked yet another conversation about the viability of certain alternative energies.

One ETF that tracks the performance of clean energy firms is the PowerShares WilderHill Clean Energy (NYSE: PBW) – a widely traded vehicle that gives you exposure to this still-growing sector in a safer way than investing in individual companies.

While firms like Exxon Mobil (NYSE: XOM) rake in billions of dollars per quarter from oil, PBW invests almost entirely in experimental, technology-focused “green” companies. And while these guys stand to benefit from higher oil prices just like specific oil companies, their success depends more on regulatory changes, subsidies and a global recognition of the need for alternative energy solutions.

The Alternative Energy Market Gets More Attention

When it comes to the alternative energy market, wind power, solar, hydroelectric, geothermal and nuclear power have all received attention over the past couple of years.

But when the oil market first began its march towards record high prices, it was the ethanol industry that took center stage and triggered the wider debate over cleaner energy resources.

However, the ethanol market faces a battle. Despite the government’s intervention and subsidies for the industry, newer technologies are needed in order to make ethanol more viable – and the industry’s companies profitable. A good example is Pacific Ethanol (Nasdaq: PEIX) – a company that Bill Gates invested in heavily a few years ago, paying $12 a share. Today, the stock trades for just $0.40.

Below is a daily chart of PowerShares WilderHill Clean Energy (NYSE: PBW), which is currently at a critical juncture:

Chart: http://www.investmentu.com/images/iu063009chart.gif

Three Scenarios for the Clean Energy Fund

As you can see, when the stock market bottomed out in March and oil prices retested their lows, PBW’s Clean Energy Fund did the same.

Since then, however, PBW has doubled off those lows to the June 10 high of $11.37. This is right around the swing high of $11.40 that it tested back in November, before it pulled back to the trendline drawn off the March lows.

In addition, the 50-day and 200-day moving averages are very close to crossing one another – a development that sometimes indicates a short-term top.

So what we have here is a relatively clear-cut conclusion…

• A close above $11.40 would be bullish and should lead to higher prices.
• However, a close below the trendline, currently around $10, would be bearish over the short-term.
• A close or two below the 50-day and 200-day moving averages, which are currently around $9.50, could lead to a move down to $8 or lower.

Source: Alternative Energy Investments: Three Scenarios For Clean Energy

The Movement for the Emancipation of the Niger Delta (MEND) said its fighters struck the Shell Forcados platform in the Delta state at about 0230 GMT.

There was no immediate independent confirmation but Shell said it shut in some oil production at its western operations in the Delta while it investigated reports of attacks.

U.S. crude for August delivery rose to a high of $70.06 per barrel, up 90 cents, before slipping back slightly to $69.75 by 1230 GMT.

London Brent crude was up 60 cents at $69.52.

“The Nigerian supply disruptions brought in some buying,” said Christopher Bellew, broker at Bache Commodities in London.

On Friday, four militant Nigerian factions said they would accept in principle an amnesty offer from President Umaru Yar’Adua, raising hopes Africa’s top oil producer would halt a battle with rebels.

Pipeline bombings, attacks on oil and gas installations and kidnapping of industry workers over the past three years have prevented Nigeria from pumping much above two-thirds of its installed oil output capacity of 3 million barrels per day.

The loss of output have been a supportive factor at a time when global recession has bitten deep into oil demand.

DEMAND FORECAST CUT

The IEA, adviser to 28 industrialised countries, has cut sharply its medium-term forecast for oil demand, saying there was a chance of an extended contraction, but added the threat of a supply crunch had only receded, not gone away.

Based on a higher economic growth scenario, the IEA predicted on Monday product demand would grow by 0.6 percent, or 540,000 bpd on average, between 2008 and 2014, taking demand from 85.8 million bpd to 89 million bpd.

The IEA’s previous medium-term forecast, issued in December, had forecast growth of a million bpd a year from 2008 to 2013.

Algerian Energy and Mines Minister Chakib Khelil said on Monday oil demand was still weak due to the weakness of the U.S. and European economies and world oil stocks remained high.

Khelil said an increase in OPEC oil production was hard to envisage, despite rising crude prices.

European stock markets crept higher on Monday with financial and energy companies responding to an improving economic outlook for the euro zone.

Dealers said macro-economic data would continue to have a major impact on sentiment in the oil market.

U.S. consumer confidence data on Tuesday leads a heavy calendar of economic data this week, including China’s Purchasing Managers Index on Wednesday and a U.S. jobs report and manufacturing data on Thursday.

The U.S. data will help determine whether an oil market rally, which has lifted prices more than 50 percent this year on hopes of economic recovery, has any legs.

In the first big number for the week, industrial output from the world’

LONDON, June 29 (Reuters)

But the renewed interest in ethanol proved to be short-lived, as oil retreated back below $20 a barrel just four months later. As a result, many of those smaller ethanol companies within the alternative energy market couldn’t survive.

Flash forward to today, where we’ve seen crude oil prices double in just the past four months. Worldwide oil demand has soared, particularly from fast-growing countries like China and India, and although the global downturn has seen the pace of demand slow, the global economy gets back on track, it should prove even more bullish for oil.

But there’s another sector that should rise, too…

Viable Alternative Energies: The Clean Energy Tracker

With oil prices rising again recently, it’s sparked yet another conversation about the viability of certain alternative energies.

One ETF that tracks the performance of clean energy firms is the PowerShares WilderHill Clean Energy(NYSE: PBW) – a widely traded vehicle that gives you exposure to this still-growing sector in a safer way than investing in individual companies.

While firms like Exxon Mobil (NYSE: XOM) rake in billions of dollars per quarter from oil, PBW invests almost entirely in experimental, technology-focused “green” companies. And while these guys stand to benefit from higher oil prices just like specific oil companies, their success depends more on regulatory changes, subsidies and a global recognition of the need for alternative energy solutions.

The Government Is Helping… But This Industry Still Faces A Battle

When it comes to the alternative energy market, wind, solar, hydroelectric, geothermal, and nuclear power have all received attention over the past couple of years.

But when the oil market first began its march towards record high prices, it was the ethanol industry that took center stage and triggered the wider debate over cleaner energy resources.

However, the ethanol market faces a battle. Despite the government’s intervention and subsidies for the industry, newer technologies are needed in order to make ethanol more viable – and the industry’s companies profitable. A good example is Pacific Ethanol (NASDAQ: PEIX) – a company that Bill Gates invested heavily in a few years ago, paying $12 a share. Today, the stock trades for just 40 cents.

Below is a daily chart of PowerShares WilderHill Clean Energy (NYSE: PBW), which is currently at a critical juncture.

Three Scenarios For The Clean Energy Fund

As you can see, when the stock market bottomed out in March and oil prices retested their lows, PBW did the same.

Since then, however, PBW has doubled off those lows to the June 10 high of $11.37. This is right around the swing high of $11.40 that it tested back in November before it pulled back to the trendline drawn off the March lows.

In addition, the 50-day and 200-day moving averages are very close to crossing one another – a development that sometimes indicates a short-term top.

So what we have here is a relatively clear-cut conclusion…

• A close above $11.40 would be bullish and should lead to higher prices.

• However, a close below the trendline, currently around $10, would be bearish over the short-term.

• A close or two below the 50-day and 200-day moving averages, which are currently around $9.50, could lead to a move down to $8 or lower.

Source: The Alternative Energy Market: Bullish & Bearish Scenarios For NYSE: PBW

Nigeria’s main militant group said on Sunday it had attacked three oil installations belonging to Royal Dutch Shellin the Niger Delta, widening a month-old offensive against Africa’s biggest energy industry.

“We’ve got weakening stock markets and the dollar is starting to strengthen,” said Rob Montefusco, a trader at Sucden Financial. “Also technically, it all broke down on Friday.”

U.S. crude for July , which expires later on Monday, fell $2.10 to $67.45 by 1414 GMT. It traded as low as $67.05 intraday, the lowest price since June 8. Brent crude slipped $1.88 to $67.31.

The World Bank warned on Monday prospects for the global economy remained “unusually uncertain” despite recent signs of improvement in parts of the world and cut its 2009 growth forecasts for most economies.

Wall Street opened lower, European stocks lost ground and the dollar rose against a basket of other major currencies. A stronger dollar can limit the appeal of oil and commodities to investors.

Chart patterns are also pointing lower for crude. Both Brent and U.S. crude closed below the $70 mark on Friday, a bearish technical development. Even so, crude has more than doubled from a low of $32.40 in December.

Rebels in Nigeria have been carrying out attacks on the oil industry for years in what they claim is a struggle for a fairer share of the region’s energy wealth.

Also supporting the market was data showing China’s implied oil demand rose 6 percent in May over a year ago, its fastest growth since August 2008. China is the world’s second largest user of oil.

In the Middle East, Iranian opposition leader Mirhossein Mousavi urged supporters to continue protests over the re-election of President Mahmoud Ahmadinejad, in a direct challenge to the Islamic Republic’s leadership.

Some analysts say the political turmoil in Iran, a major oil exporter, so far is of limited significance for the markets due to high levels of unused production capacity and inventories. Others see it as supportive.

“The deterioration in the Iranian situation should prevent a sharper sell-off,” said Edward Meir, analyst at MF Global.

Crude oil speculators on the New York Mercantile Exchange slashed their net long positions nearly in half in the week to June 16, data showed on Friday. Long positions are bets that prices will rise.

LONDON, June 22 (Reuters)

As I’ve mentioned in recent issues, oil had near-term targets of $70 in its sights. It hasn’t disappointed, shooting past the $73 mark late last week – a level not seen since the first week of November 2008.

On a technical basis, because oil has not only moved above, but also stayed above all the major moving averages (including the all-important 200-day average), it’s now got $80 in its sights. If any pullback is going to occur, which should happen after solid runs like this, the move down should hold at the $65 per barrel range.

On a fundamental note, we’ve got three reasons for the recent price rise…

1. Hedge funds seem to be pumping more money into the market again.
2. OPEC has decreased oil supply levels.
3. There seems to be some consensus that oil demand might be picking up from the slack levels seen over the past six months.

For now, the market looks strong and any pullbacks should be met with more buying. Here’s how you can play it…

How To Play Oil With Minimum Fuss

The chart below shows the daily movements of the front-month futures contract (July)…

The easiest way to play the broad oil market (either to the upside or downside) is to go for the very popular and highly liquid exchange traded fund, United States Oil (NYSE: USO). The fund mimics the moves of crude oil futures that trade on the NYMEX.

You can trade USO like a normal stock in a regular stock brokerage account and the ETF has options contracts available, too.

Since we first went bullish on oil, USO traded around $32. It’s now around $38.80 and is a very effective “cheaper” alternative to the high-priced arena of futures and futures options, while still profiting from the same moves as the underlying oil market.

Natural Gas Making Unnatural Moves

Having been stuck in the doldrums for ages, the natural gas market has really woken up recently.

Prices have coiled into a narrow trading range over the past two weeks, with volatile swings of 300-400 points over just a few days becoming the norm. At the moment, it looks like the $3.50 per MMB/tu level is the floor, while the market tries to decide which way it eventually wants to go.

Keep Tabs On The 20-Day Moving Average For Clues To The Next Move

With natural gas prices still sitting near multi-year lows, we continue to have a bullish longer-term perspective.

Also, I’ll reiterate a technical observation from my last issue: Because the 20-day moving average has crossed above the 50-day moving average for the first time since July 2008, this usually leads to a change in direction.

However, as volatile as natural gas is, the 20-day MA is flirting with crossing back underneath the 50-day MA, unless natural gas can muster a convincing move above the $4.000 per MMB/tu level.

We still like natural gas on the long side, but be patient here. This is a real, in-demand natural resource commodity, so it never has the worry factor of going out of business or bankrupt.

You can participate in this market by using the equivalent ETF for natural gas - United States Natural Gas(NYSE: UNG), which reacts just like the futures and futures options do. If you’re considering bullish strategies, UNG offers options contracts as well.

When Inflation Hits, You Want To Be Invested Here

The financials markets and investing can be a highly divisive subject… but most people agree on one thing:

Interest rates and inflation will rise eventually (in fact, rates have already started to rise), while the U.S. dollar will fall. This will be in response to the huge debt that the American government is getting itself into, due to the financial crisis and bailout programs.

Scenarios like this have always led to bullish moves into commodities, as they can buffer the effects just mentioned above. Witness the bullish moves in virtually every commodity sector that began in earnest a few months ago.

One of the best places to be in order to protect yourself from inflation is the metals markets. In fact, gold and silver have fared exceptionally well since the end of 2008 – and haven’t looked back since.

Our technical levels have served us well, allowing us to spot the support areas for both metals – gold near the $880 per ounce level, while solid support for silver comes in at $12.000 per ounce. Both have bounced from those areas and have enjoyed strong moves.

Although both metals are currently seeing slight pullbacks, they should resume their upward marches toward $1,000 and $20 for gold and silver respectively.

You can trade gold and silver directly through the futures options that trade on the NYMEX. Or if you prefer regular stock and options-based plays, check out their respective ETFs – the SPDR Gold Shares (NYSE: GLD) and iShares Silver Trust (NYSE: SLV).

Source:Three Reasons Why Oil Prices Are Rising… And Where They’re Headed Next