Tuesday, June 30, 2009

TUESDAY -- BEFORE THE OPENING BELL

It was for the most part a pretty uneventful day yesterday -- slight weakness in gold -- and oil, of course, was stronger.

So we will see what today, the final day of the quarter, brings. For the most part, there is little to say that we did not say yesterday. Don't forget that there could be those end-of-the-quarter games -- and, of course, this is a short four-day trading week. And we are in those hazy, lazy days of summer.

There are some upgrades out there -- solars looking stronger.

And we are still keeping our eyes focused on the same things cited yesterday -- including $USD and precious metals.

Be careful -- and have a great day!

Monday, June 29, 2009

Monday Market And Trading

Hope everyone had a nice weekend. We are a little late getting our Monday morning report out – the opening bell just crept up on us as we were making morning checks. Oil, at least at one point earlier today, rose to $70 a barrel after word that China wants to increase its reserves by 160 percent.

Actually, we have been quite focused on China – and over the weekend started working on an article that will be posted here either later today or perhaps tomorrow. Without a doubt, China is a major force that significantly affects the US markets – and China always demands watching.

Friday trading had pretty good volume, but it was a day that was a bit hard to read in a meaningful way because of the Russell rebalancing.

Now we are staring a new quarter in the eye. While the S&P500 raises an eyebrow for a head and shoulders pattern and the number of charts for betting short has been increasing, there remain some sectors or areas of sectors such as Technology that still look pretty okay.

Has there been a day when we haven’t mentioned watching the $USD? But that’s exactly what we are doing, especially as our dollar relates to movement in some of the foreign exchange indexes. A keen eye can sometimes pick up an early hint of which way the market winds are going to blow. And, of course, as always, watching the dollar is always important with respect to the movement in commodities.

Also, we continue to watch gold and silver, including the movement of one compared to the other, not only in watching for good entry points, but again with respect to hints at market direction.

This is not a time to get cocky – we must keep our wits about us as we navigate this market.

Friday, June 26, 2009

Weekend Reading, June 27 and 28

UNITED STATES

House passes climate bill of more than 1,200 pages

Industry must drive US economy

Google CEO says recovery is likely to begin in autumn, the worst of the crisis has passed

US debter status has dramatically deteriorated, foreigners hold 50 percent of fed government's publicly held debt

US triples its aid funding to Pakistan


COMPANY/INDUSTRY RELATED

Some analysts predict good times for hard drive manufacturers

Six stocks predicted to have big gains, emphasis on industry leaders with strong finances

Global steel demand expected to drop up to 15 percent this year

Yamana Gold a take-over target


CHINA

China advised to buy gold to hedge US dollar

China wants new global currency reserve

Venture Capitalism in China, India

Every week ... ships arrive from Australia, Brazil, India and Indonesia to feed China's hundry steel mills


OTHER INTERNATIONAL

Russian Prime Minister Putin invites Royal Dutch Shell to participate in gas projects

Japan and South Korea want to work together to bring their economies back to health

'Butcher of the Press' to interrogate reformists in Iran

Vodka kills as many Russians as a war


OTHER READING

California drivers might start buying automobile insurance by the mile

FRIDAY'S MARKET

Since we find ourselves short on time before the market open, this will be an abbreviated post -- but basically our thoughts are unchanged over the past few days. (And, of course, do not forget that weekend reading will be posted tomorrow.)

Yesterday was a better day with basically pretty much all sectors performing well -- including the goldminers that we have been talking about.

Long-term we still continue to like precious metals -- but, as always, it is important to be smart as to timing and price.

The market is looking to open flattish to down. Nothing has changed -- yes, we remain extra cautious, not at all trusting -- and mindful of Russell rebalancing and possible end-of-month games.

Thursday, June 25, 2009

FUTURES INDICATE FLAT OPEN THURSDAY

Fair values are at the moment are indicating a relatively flat market open.

At the open yesterday it looked like the Bulls had stepped up to the plate, but later their efforts seemed more half-hearted as the market slumped following FOMC news.

Just as we predicted, goldminers showed some strength, especially early – and despite losing some ground later in the day, still ended day day higher. Technology, financials and basic materials all fared well. And big oil and pharmaceuticals showed some weakness.

The market has that feeling of summer doldrums, but, of course, all it takes is one piece of news to create wild swings one way or the other. And we are mindful of folks who might want to play games to make end-of-the-quarter numbers – which could at least temporarily create a bounce higher.

We will continue to look at charts for both the long and short sides – and any moves that we make will definitely be tiny.

Wednesday, June 24, 2009

WORLDWIDE THE RICH LOST 20 PERCENT OF THEIR WEALTH IN 2008

The rich of the world are not likely to look back at 2008 as a terrific year. Indeed, during this period of economic uncertainty and shaky markets, the world' rich saw their total wealth dwindle by almost 20 percent, according to a Merrill Lynch study cited by Reuters.

"The total value of the wealth of people with net assets of more than $1 million, excluding their main home and consumables, dropped to $32.8 trillion -- below 2005 levels," the 13th annual world wealth report revealed.




Also, the report cited a decline of nearly 15 percent in the number of people with more than $1 million in assets -- and about a 25 percent drop in the number of people who could lay claim to fortunes in excess of $30 million

Futures Looking Higher on Wednesday

The European Central Bank reported that it will lend Euro442 billion (US $662.63 billion) at 1% to banks for twelve months which should reduce costs for borrowing for banks, companies and consumers. And it is expected that the Fed today will also be looking to keep short-term interest rates low.

Early morning futures are indicating a higher open. Yesterday some oversold stocks made some decent upward moves, but for the most part market action was rather bland. There are still some decent charts, but anything that we do will be very small in size.

Of course, we have an eye on gold.

Tuesday, June 23, 2009

Futures Pointing to a Higher Open for Tuesday

Yesterday was ugly, the worst day in two months. Before the open, we said that we would be watching to see if the S&P 920 level could be held -- and, of course, neither the 200 day nor the 50 day moving averages were maintained.

Thankfully, the futures are indicating a higher open today, but the ugliness of yesterday still hangs -- a reminder of how quickly gains can slip away.

Crude oil, which dipped below $67 for the first time in three weeks, and commodities in general have plunged.

We have tended not to do much recently. The market had gotten heated, and it seemed best to protect gains.

Clearer signals eventually emerge, and those are the signals that we wait and watch for. In the meantime, we will examine charts, looking at both the long and short side. And we will be patient -- sometimes hard to do, but often with nice rewards.

Monday, June 22, 2009

Futures Once Again Pointing to a Lower Opening

After last week, it would be nice to be looking at an easy week ahead. But, of course, there is never a moment when we can let our guard down -- and it seems that we actually need to be particularly vigilant now.

Our eyes continue to be focused on the overseas markets, whether the S&P 500 will hold the around 920 level -- and, of course, the $USD, gold and silver.

There are still some strong charts, but also some that are looking more worrisome than a couple of week ago. Oil seems especially vulnerable. There are some metal/mining charts that look okay. And we are keeping a close eye on selective silver companies, looking for a good entry.

Still and as always, though, the primary focus is on protecting profits and not letting them slip away. We will always miss opportunities here and there, but what we consider most hurtful is to lose what has been gained.

It pays to be careful.

Thursday, June 18, 2009

Back On Board

Finally the computer is up and running again.

The market seems pretty bland thus far today – and we are waiting for clearer signals before putting any real money to work. As always, the goal is to protect our capital – and our stance has always been to watch and wait until the market tells us what to do.

Without a doubt, the market had become over-heated. But the Bears have had their way for a few days now – and the question is whether the Bulls will step back up and retake control. And will the Bulls allow stocks to move back up – or will they flip and take gains as quickly as they are there?

Technically there has been no significant damage. Plenty of charts have bases and are still just fine.

So we simply just watch and wait – vigilantly keeping our eyes wide open. In the meantime, we will get back to charts and reading.

Wednesday, June 17, 2009

Computer Not Functioning -- Should be back posting messages tomorrow

Folks,
The computer is not working -- a new router is on its way from Verizon. So with luck I will be posting messages again tomorrow.

Judy

Monday, June 15, 2009

Monday Morning -- Futures Pointing to a Lower Open

Well, folks, the major Indices are pointing to a weaker open for the market today. Soon it will be our summer solstice – so officially it seems that we are entering what is often considered the slow, lazy summer trading time of year.

Of course, the market has continued to drift in the same trading range that we have been discussing for a while now -- and it seems that everyone is wondering whether the Bulls will maintain their somewhat limited control or whether the Bears will step up and gain some traction. Whichever way the wind blows, stay diligent and react accordingly.

At this moment commodities are looking a bit weaker. Focus will continue to be on China’s demand – and watching the $USD. But we continue to like oil, gold and silver when the prices are right.

As always, though, nothing has changed – we continue to sell strength and buy into dips. It is the approach that has been working – so we will take advantage of it until there is a change.

Friday, June 12, 2009

Weekend Reading -- An Amazing List of Must Read Articles

IMPORTANT INTERNATIONAL/NATIONAL NEWS!

Tough sanctions for North Korea

North Korea views US-led 'blockade' an act of war

Obama offers cuts to pay for healthcare reform

Quit mirandizing terrorists

Economic recovery--is everything good again



CONGRATS TO PITTSBURGH PENGUINS FOR THEIR THRILLING STANLEY CUP VICTORY -- SOME GREAT COVERAGE BELOW!

Penguins win Stanley Cup in thriller

Stanley Cup partying in Pittsburgh

Injured Crosby lives is dream (sort of)



LOTS OF INTERESTING MINING-TYPE STOCKS INFO!

Thanks to Obama administration, Appalachian coal faces tougher regulatory challenges ahead

Demise of Rio Tinto/Chinalco deal is good for Rio Tinto shareholders

Dollar not only currency in disarray

Kevin Kerr on playing the weak dollar

Trading sessions experienced strong net outflows from gold and silver stocks and strong net inflows in copper, zinc, aluminium and nickel

Bottom fishing for global mining stocks

Experts expect new-build ship cancellations to continue


STOCK SELECTIONS BY SOME EXPERTS!

Six stocks positioned for big gains

Four great tech stocks

Stocks for real estate rebound



OTHER INTERESTING ARTICLES!

Entrepreneurs in China and India

Fewer Engineers and More Anthropologists

How Hyundai sells more when competition cannot find the formula for doing that

Industrial clusters changing Chinese manufacturing


AND THESE!

Mark Cuban oftens posts pearls of wisdom on his blog--this time on success and motivation, 2009

Facebook user names at 550 per second

Index Futures Pointing to Flat Open on Friday

Early Friday morning the US stock Index futures were pointing to a rather flat market open.

In Thursday's action, it seemed that some underinvested folks decided to buy -- and some folks betting short decided to cover. But the market that was trading higher through the day began to wane toward the closing bell -- typical lately. So far the Bull is still snorting and stomping, trying to gain traction for a sustained move over S&P 950 -- but, thus far, he has been pretty much just putting on a good show because the reality is that we seem rather range-bound.

Canada's Financial Post As a News Resource

Waking at 4:30 a.m. has provided a bit of time to meander around the internet in search of new information about companies and stocks. Sleeplessness is not unusual, nor is working online in predawn hours. But this time I had a computer problem -- temporarily lost my bookmarks -- so, without the reliance on old stand-by websites, I ventured into new territory in my news search.

Obviously, there are advantages in going past the familiar because I stumbled upon Canada's Financial Post. And it is hard to believe that in all of this time, I have never visited this site that offers some very interesting information -- and seems especially strong with respect to energy and mining which are, of course, huge industries in Canada.

Some of the tidbits at this website:

Aside from an article on the global economy with thoughts from the Bank of Canada governor, the major headline was, "TransCanada's Alaska pipline project gets big boost." TransCanada Corp has sold one of its natural gas pipelines, located in the US, to TC PipeLines for US$395 million in cash and shares. The North Baja pipeline extends from southwestern Arizona to the California-Mexican border. TransCanada bought the property about five years ago when California "was emerging from its energy crisis from earlier in the decade, ... (but) new technology has opened up previously inaccessible pockets of shale natural gas, which is also cheaper to process, pushing the location advantage of the property into the future." With an abundance of other opportunities, TransCanada decided to opt for capital instead of a "mature asset."

Also on the Financial Post website:

There were articles relating to Yamana Gold, both with respect to the company's possible takeover targets and with respect to the company's announced deal to sell three producing mines to Aura Minerals of Vancouver, British Columbia. That deal sent the price of Aura stock shares soaring on Thursday. And Raymond James analyst Tom Meyer, who upgraded Aura to "strong buy," said that the deal propels Aura "into a gold producer of 'reasonable size" with plenty of near-term cash flow coming from gold. "

The three producing mines that the Vancouver based Aurora Minerals is acquiring from Yamana are -- the San Andres Gold Mine in Honduras and the Sao Francisco and Sao Vicente Gold Mines in Brazil.

Aura claims that among the benefits that it will garner:



Intermediate gold production and cash flow with an estimated average annual production of 220,000 gold ounces at average cash costs of US$555 per ounces in the Americas

Acquire 1.8 million gold ounces of proven and probable
reserves, plus additional 2.44 million gold ounces of measured and indicated resources and additional 0.8 gold ounces of inferred resources


Further information may be obtained regarding both of these news events by visiting the Financial Post website -- which may be reached by clicking the headline above.

Monday, June 8, 2009

A Study of Favorite Stock Selections

Followers of the stock market, from gurus to novices, tend to have a special selection of stocks that they expect to do well -- and to outperform the market in general. And today, weeks after what many experts have been calling a market bottom, it seems a thought-provoking exercise to look at and follow some of the stocks being touted on industry-related websites.

It is understood that not every individual has the same investing style or time horizon, but, regardless, it should still be interesting to follow these stocks to see how well they perform over the short term and long term. And since the stocks were all mentioned at about the same time, at least the starting date for the group is quite comparable.

Two experts have their selections published in articles on the MoneyShow.com website. The remaining selections come from The Motley Fool staff based on recent recommendations by their investing community.


First, Richard Band, editor of Profitable Investing, theorizes that the stocks that suffered the greatest at the very end of the economic downturn are the ones that surge most early in a recovery. Eventually traders will take their profits in these stocks and move instead to “safer, steadier companies whose share prices haven’t climbed as far yet.” He likes large caps ExxonMobil and PepsiCo. Band's comments:

"ExxonMobil (NYSE: XOM), which has continued to drill aggressively during the industry downturn, will be set to cash in almost immediately (on) even a modest recovery in global business activity (that) will eat into inventories of oil and natural gas, putting upward pressures on prices. The financial titan of oil, sitting on $31 billion of cash (enough to pay off all the company's debt three times over), XOM is seldom a cheap stock. Since early March, though, investors have raced into dicier energy plays and left Exxon behind. It’s time for quality to catch up.

PepsiCo (NYSE: PEP), which produces Lay’s snack foods and Quaker Oats cereals as well as soft drinks, fruit juices and bottled water, is run by one tough customer, Indra Nooyi, who ‘got going’ in early May with a 6% dividend hike. The company has now sweetened its payout 37 years in a row. …. Sill, I’m even more impressed with PEP’s generous dividend yield – currently around 3.3%.”

James Oberweis, editor of Oberweis Report, notes that Chinese stocks skyrocketed so far this year, but, even so, he believes that they will be excellent investments over the longer term. Oberweis’ top picks are two small Chinese ADRs. He opines:

“E-House (China) Holdings (NYSE: EJ) is the largest Chinese property agent, the Chinese version of Century 21. …. We see E-House as the best way to play a continued rebound in Chinese property sales volumes. The firm has a strong market position, doesn't carry inventory like developers, and has a healthy balance sheet with no debt.

“New Oriental Education (NYSE: EDU) provides foreign-language training and college test preparation courses. Education is highly prized in China, and the huge gap in wages between the educated and uneducated is leading families to invest heavily in their child’s studies.”

The Motley Fool Staff, with input from its large community of members, offered a list of stocks that they tagged "5-Star Stocks on the Upswing" for 6/8/09. They state:

“There is, however, an easy way to increase your odds of finding the stocks that will beat the market. At Motley Fool CAPS, the Fool’s investing community of more than 135,000 members, we’ve found that our ‘five-star portfolio’ is up 15.331% between January 2007 and April 2009, compared to a loss of 40.6% for the S&P 500. In order to fully capture the upside potential of those five-star stocks, it makes sense to identify them just as soon as they achieve five-star status.”

Their stocks selections, which had just the day earlier attained five-star status: Incyte Corp (Nasdaq: INCY), Ternium S. A. (ADR) (NYSE: TX), Allis-Chambers Energy, Inc. (NYSE: ALY), Columbus, McKinnon Corp (Nasdaq: CMCO), Bio-Reference Laboratories, Inc. (Nasdaq: BRLI), Nam Tai Electronics, Inc (NYSE: NTE) and Medicis Pharmaceutical Corp (NYSE: MRX).

In the future, we will look at each of these companies – and the prices used for this study will be the closing prices for each on Monday, June 8, 2009.

To read the complete articles referenced above, follow the appropriate links below.
Richard Band for MoneyShow.com, Two Picks for a Summer Pull Back
James Oberweis for MoneyShow.com, Two Ways to Ride the Dragon
The Motley Fool, 5-Star Stocks on the Upswing





Thoughts on This Week

Early Monday morning, US futures indicated a weak market opening -- and strength in the US dollar had commodities looking to trade lower.

While the Bulls have maintained their slight edge, some stocks have felt a bit tired of late. But last week did find the major indices looking fine from an intermediate technical view -- which signals that the Bulls can certainly continue to trudge this market higher.

For our part, we are maintaining an "eagle eye" and are never too trusting. And we have one of those eagle eyes focused on the strength of the US dollar, especially with respect to commodities.

Emerging market stocks have been strong, especially China and India -- and tiny biotechs have been rocketships lately.

But it seems that the market, for the most part, continues in its trading range -- and we expect to continue to sell strength and buy weakness. Chasing stocks, not for the faint of heart, is not our style -- so we are selective with buys, preferring to show patience in waiting for stocks to come to us. The primary mission, as always, is in protecting capital -- keeping gains.

Saturday, June 6, 2009

Weekly Wrap-Up and The Week Ahead

Chalk Another One Up for the Bulls

While Friday’s session saw some rather mixed action, the week was another positive one for the Bulls with the major indices ending up.

On Friday stocks initially moved higher after the Department of Labor reported that fewer jobs were lost than expected. But shortly thereafter the market began to slip – and the day ended with the Dow Jones Industrials higher by nearly 13 points, but the Nasdaq lost 0.60 and the S&P 500 lost 2.37 points. Industrials and emerging market stocks fared well. Financials, semiconductors and retail stocks exhibited weakness. And crude oil futures closed down with the stronger $USD.

With the quarter ending in three weeks, it seems likely that the market might enjoy some support as money managers look to add exposure and impress. But it is always prudent to keep a sharp eye on the market – and maintain vigilance.

Friday, June 5, 2009

Weekend Reading--Compelling Stories & Some Fun Links Too

President Obama visits Holocaust landmarks

The Jerusalem Post highlights reaction to Obama's speech

Slower job losses in US hint that recession might be easing

Obama aministration travel has been to states that Obama won in 2008, not to Southern states that he lost


Third week of gains for Asian stocks

A whole new bull run? Maybe

Nouriel Roubini Prediction

Rogers Holdings Chairman Jim Rogers predicts currency crisis

Jim Rogers says that his best investment was his daughters


President of Nestle's Brazilian unit expects that coffee and sugar prices may move higher

Making money from oil's rebound

And what about gold?

Selling Platinum and buying palladium

Trading Apple



Why Dunkin Donuts gave away free doughnuts on Friday

Hot Green Mountain coffee

Microsoft's early-realed Bing Ads have people talking

P&G to phase out US distribution of Max Factor brand

Interview with Tim Armstrong: Why he left Google to move to AOL (and other


A favorite, Rocketman

"The Day the Media Died"

This is incredibly funny--Massage therapist for models


Just 10 percent of Twitters do most of the tweeting

Make $10,000 a month tweeting

Susan Boyle, Final performance, Britains Got Talent

Friday Significant News

Mideast has mixed reactions on Obama

State budgets "carnage" worsening reports National Conference of State Legislatures

US job losses slow

Oil on tankers surges 71 percent since early April

Insider selling frenzy

Rio Tinto and BHP Billiton, with a joint-venture deal, led European markets higher

iPhone to highlight developers conference

Steve Jobs ready to resume work at Apple

Indian investors may react to US inflation risk

Indian market may perform better than worldwide peers

Tata Motors hopes to sell world's cheapest car in US

GM to sell Saturn brand to Penske

Mitsubishi's expects its $47,000 electric car will help it challenge competitors

MTS and Nokia partner for sales in Russia

Cessna planning more layoffs and cost cutting

IRS might require that income tax preparers be licensed

Penguins are "even and believin'" in Stanley Cup Finals

Penguins used 'exotic route' to 4-2 victory says Starkey

Thursday, June 4, 2009

Complete text of President Obama's Cairo speech

Thursday's Action: At OK Coral, it was OK

Heard the Bulls give a sigh of relief at the close today. After a slightly weak opening, the Bulls snorted, pawed the ground for a bit, stood firm -- and got the market moving higher, posting some pretty significant moves in the financial, materials and energy sectors.

Retailers, with unimpressive sales in May, were the day's laggards.

The Dow Jones Industrials ended the day up 74.96 points (0.86%), while the Nasdaq Comp posted a 24.10 (1.32%) point gain and the S&P 500 a 10.70 (1.15%) gain.

Thursday Morning Highlights

President Obama wants new beginning with Muslim world

Pentagon top secret clearance flaws

Wal-mart opening new stores and creating about 22,000 jobs in 2009

Bernanke: Debt threatens recovery

China's National Petroleum Corporation signed $4.7 billion contract with National Iranian Oil Company

Rio Tinto May Consider $15 billion sale of stock

Andrew Gillian of Aberdeen thinks that investors should buy Indian and Brazilian stocks

Goldman Sachs raises target on light sweet crude to $75

Some retailers might not reach May sales expectations

Peru ETF will start trading on New York stock exchange this month

Medical bills a factor in many bankruptcies

Wednesday, June 3, 2009

Air France Tragedy Strongly Affects StatoilHydro

StatoilHydro, the Norwegian oil and gas giant, has been hard hit by the news that three colleages were among the passengers of Air France Flight 447 that disappeared over the Atlantic Ocean earlier this week.

Geologist Marcela Pellizzon, 29, joined StatoilHydro as a contractor in the 2008. She was married to another company employee in Brazil.

Lawyer Gustavo Peretti, 30, also came to StatoilHydro in 2008. He had worked at the Oslo office prior to transferring to the Rio office.

And laywer Kristian Berg Andersen, 37, a Norwegian citizen, joined StatoilHydro in 2002 and was said to have been instrumental in the take-over of Brazil's Peregrino field.

One of the two other Norwegians on that flight had been a supplier to StatoilHydro for 35 years.

The company's commercial activities continued, but all social activities were cancelled and forums were held to help friends and colleages deal with and express their emotions.

"We have learned that three of our people were on the flight with great sadness," said StatoilHydro Chief Executive Helge Lund. "A tragedy like this makes a deep impression on us as colleagues and managers. Our thoughts and sympathies are with the next-of-kin. ... Naturally, the Brazilian organization was particularly affected .... Our attention is now focused on supporting and assisting families and colleagues in Brazil, as well as in Norway."

Oil Tumbles After Unexpected Increase in Supply

Wednesday Morning Reading

Early indications are for a weaker open

President Obama starts Middle East tour

Al Qaeda threat of bio attack from Mexico

Confidential nuke locations were posted on the web

Foreign reporters barred from Tiananmen Square

European spending and exports suffer large decline

US Planned layoffs have declined to eight-month low

New vehicle sales rise

American geologist and his wife among passengers on Air France flight 447

Across rural America, a growing number of farmers are taking their own lives

Cymbalta application resubmitted by Lilly to FDA

Germany's wind farms in jeopardy

IRS files lien on 2004 Kerry campaign

Is the US one of the largest Muslin nations?

Global distrust of business has increased

Time spent on social networks nearly doubles in a year

Pittsburgh Penguins Bet Detroit Red Wings

Penguins superstar, Crosby, is marketer's dream come true

Monday, June 1, 2009

The Quest for Oil by China and the United States

On Monday, after China reported an escalation of manufacturing in May, crude oil soared to its highest level in seven months.

There seem compelling indications that China is not only strengthening economically and industrially, but that China is establishing strong footholds in oil-rich nations African that may or may not decide to sell oil to the United States in the future. For decades China and African nations have shared diplomatic and economic relations, sweetened by China in offering economic grants as well as either preferential or interest-free loans, according to an Institute for Analysis of Global Security (IAGS) report. A relationship with Africa is presumably much easier for China than it would be for the United States since China seems largely unconcerned about issues such as human rights and corruption, the report continues.

While China's connections oil-producing nations, such as the African nations, may result in a supply of oil, that in no way implies that China's dependence upon the Middle East for oil is therefore diminished. In fact, China's dependence on Middle East oil is expected to escalate.

The IAGS reports that China has acquired interests in "exploration and production in places like Kazakhstan, Russia, Venezuela, Sudan, West Africa, Iran, Saudi Arabia and Canada." And it further states that even though China has fostered connections these other nations, its "has become increasingly dependent on Middle East oil. Today, 58 percnet of China's oil imports come from the region. By 2015, the share of Middle East oil will stand on 70 percent."

The China effect on both oil consumption and oil prices cannot be denied. The country, with 1.3 billion people or about one-fifth of the world's population, is second only to the United States in oil consumption. And with its industrialization and economy flourishing and it's population expected to reach 1.5 billion by the 2030's, it seems that the country's demand for oil cannot help but surge.

And there are other factors impacting China's energy needs, including a migration of its people from rural to urban areas, massive highway construction program and movement from foot and bicycle traffic to automobiles. Where China's city streets were once bustling with bicyclists and pedestrians, today they are jammed with automobile traffic. Indeed, it is not surprising that many experts think that China's greatest need will be for light petroleum products, motor fuels and some petrochemicals.

Back in the fall of 2007, China had 120 million privately owned vehicles, according to The China Car Times. Of the country's vehicles, it was revealed that just 61.25 percent were privately owned, and another 38.75 percent were state owned. This information was reportedly derived from Chinese state news agency Xinhua and based on statistics from Chinas' Traffic Administration of Ministry of Public Security.

And six months after the publication of that article, China's Petroleum and Chemical Industry Association (CPCIA) revealed that "China's apparent consumption of oil products composed of gasoline, diesel and kerosene rose by 16.5 percent year on year to 52.73 million tonnes in the first three months, and crude oil rose by 8 percent to 91.8 million tones."

Of course, it seems that there is little question about China's growing need for energy. But less transparent are "the nature and scale of the energy and environmental challenges facing the country, the policy responses of the goverment, the existing legal and regulatory framework, and the implications of Chinese energy challenges," cites a report issued by Oil, Gas & Energy Law.

Highly interesting is China's fostering of relationships and acquiring equity in oilfields beyond the Middle East. "China is focusing its efforts ... on finding energy resources in other regions around the world, such as the Caspian, Russia, the Americas, the East an South China Sea and Africa," explains an Institute for the Analysis of Global Security (IAGS) report. "China has either established or been pursuing oil deals with 100 percent of those countries that have at least 0.5 billion barrels of proven reserves," the IAGS report states.

Given the finate supply of global oil and the growing needs of oil-hungry China and the United States, it seems critical to understand how the world's second largest oil consumer expects to meet its demands -- and how China's inroads, particularly oil-producing nations as those in Africa, will impact the United States' access to oil. What will happen if those nations decide to deal exclusively or primarily with China -- and to supply little or no oil to the United States?

So while the United States perhaps will want to keep a close eye on China's inroads into countries such as those in Africa, it seems that both China and the United States will continue to turn to the Middle East for extensive oil supplies.


Sources:

Fueling the dragon: China's race into the oil market"

China Car Times, Oct. 10, 2007

China's Oil Rush in Africa by Cindy Hurt, political-military research analyst with the Foreign Military Studies Office, for The Institute for Analysis of Global Security (IAGS), dated July 2006

Introduction to the OGEL Special Issue on 'China's Energy and Environmental challenges', Oil, Gas & Energy Law

China's Growing Demand for Oil and Its Impact on US Petroleum Markets, Congressional Budget Office, April, 2006

China's Oil Consumption hits record high in first quarter, April 2008