Thomas Edison’s Dream Smashed

By Adam J. Crawford, Analyst

The incandescent light bulb was invented in the very early 1800s, but at that time was a device too crude and impractical for mass adoption. Over the next 80 years, at least 20 inventors contributed to its improvement, until, in 1880, Thomas Edison developed and patented a bulb that would last a miraculous 1,200 hours. Edison’s product was the first to offer the levels of functionality, durability, and affordability necessary for widespread commercial appeal. That’s why he gets credit for inventing the light bulb, even though he was decades late to the party.


Some 130 years after Edison’s patent was approved, the incandescent light bulb has basically the same features… a filament inside a glass bulb with a screw base. And for all those years, it’s been doing yeoman-like work providing clean, quality lighting (compared to the candles and oil lanterns of the 19^th century), in millions of homes and offices. Today, however, the incandescent light bulb is on its way out… and a multibillion-dollar industry will be forever changed.

Done In by Inefficiency

The incandescent bulb, though very effective, is notoriously inefficient. To understand why, one need only understand how it produces light. The filament (or wire) inside a bulb is heated by an electric current until it becomes so hot it glows.

The problem: only about 10% of the energy used by an incandescent bulb is converted into light; the rest is dissipated as usually unwanted heat.

This is a problem, not just for the homes and businesses using these bulbs, but also upstream at the power plants that produce the required energy. In an era when producers are wondering how they’re going to keep up with the surging demand amidst rising fuel costs and concern about the environmental impact of energy production is running high, such inefficiencies are frowned on.

Governments, of course, have the ability to put muscle behind their frowns… and they’re doing just that. In 2013, it became illegal in the United States to manufacture or import 75 and 100 watt incandescent bulbs. 40 and 60 watt bulbs were added to the ban in January of this year. The U.S. isn’t the only government actively limiting the use of incandescent bulbs. The European Union, Canada, Brazil, Australia, and even China are among many that have phase out programs aimed at forcing users to convert to an alternative technology.

For household applications, that primarily means a switch to those twisty shaped compact fluorescent lamps (CFLs), or the newest competition in town, light emitting diodes (LEDs).

A CFL’s spiral tube contains argon and mercury vapors, and they are far more efficient than the old Edison bulb. When an electrical current is passed through the vapors, invisible ultraviolet light is produced. The ultraviolet light is transformed into visible light when it strikes a fluorescent coating on the inside of the tube.. all at about one fourth the electrical cost for an equivalent amount of light from an incandescent lamp.

LEDs, in contrast, don’t use commonplace materials. Rather, they’re made from somewhat exotic semiconductor materials, like indium and gallium nitride. When an electrical current is passed through these semiconductors, energy is released in the form of particles called photons—the most basic units of light in physics, i.e., light’s equivalent of individual electrons. In the process, little is lost to heat and the materials take minimal wear, making for another very efficient light source, and one that lasts far longer than its competitors.

Comparing the Alternatives

Right now, LED bulbs are relatively expensive to produce. That’s because a bulb is not just a bulb when it comes to LEDs—it can’t be made brighter by just putting in a thicker filament or tube. Instead, each bulb is a complex web of up to dozens of small diodes, each roughly the size of a pinhead, wired together and to a ballast that regulates the electricity flowing through them.

When compared head to head with incandescent and CFL light bulbs, LEDs come out the clear winner in operating costs. But even with millions of these bulbs now shipping to Home Depot, they still fall down on initial cost:

60-WATT Equivalent	Incandescent	CFL	LED
Lumen	880	800	800
Life (hours)	1,000	8,000	25,000
Initial cost	$1.19	$5.00	$9.98
Yearly operating cost	$7.23	$1.81	$1.45

However, when you add up those advantages over that 25,000 hour lifetime, then the advantages start to become clear:

60-WATT Equivalent	Incandescent	CFL	LED
Yearly operating cost	$7.23	$1.81	$1.45
Years	23	23	23
23-year operating cost	$166.29	$41.63	$33.35
Initial cost	$1.19	$5.00	$10.00
Replacement cost	$28.56	$10.00	$0.00
Total cost	$196.04	$56.63	$43.35

As you can see, to produce roughly the same lumens (a measure of the amount of visible light emitted by a source), both CFLs and LEDs are hands-down more economical than incandescent bulbs.

Of course, in a residential scenario where a bulb is run for maybe three hours a day, it would take about 23 years to realize that big a savings. But put them in place in a commercial or industrial setting like the hundreds of lights running 24 hours a day in the local Walmart, and the savings add up quickly.

Still, why are we so bullish on the prospects for LEDs if they barely edge out their CFL competitors over tens of thousands of hours?

The first difference is environmental. CFLs have the inherent disadvantage of containing mercury, a toxic metal that poses health and environmental risks. Break one of these bulbs and you have a biohazard on your hands. There’s a real cost to recycling these bulbs and containing the mess from those that are just tossed in the trash heap. It’s a cost that will certainly be shifted back to consumers of the bulbs if environmental legislation continues on its same path.

Further still, over its life, an LED bulb is already 25% more economical than a CFL. When compared to an incandescent bulb, either is a huge cost winner. But when it comes down to dollars and cents, the LED wins today. The only reason not go that route is the big upfront cost difference, which when buying tens of thousands of bulbs at a time (as many commercial companies do) can be a hard pill to swallow.

However, the cost of LEDs has been falling fast in recent years and will continue to do so. In 2011, a 60 watt equivalent LED bulb retailed for about $40. In 2012, the price fell below $20. Today, it’s less than $10.

As volumes increase and competition among manufacturers and retailers intensifies, prices will continue to fall. Some industry analysts see a $5 LED on the near horizon. We wouldn’t bet against it.

The price could go even lower if manufacturers can successfully implement a cost-reduction break through. Specifically, LED devices are built on expensive aluminum oxide substrates. But manufacturers are working on ways to build on substrates made of silicon, which would substantially reduce defects and thus costs. As prices drop, and if environmental law hits mercury laced CFLs next, LED’s cost advantage will start to widen significantly.

Inflection Point

This all means that the LED’s time has arrived. According to IHS, a global market and economic research firm, unit shipments of LED lighting devices will grow at a compounded annual rate of 40% between now and 2020.

In 2011, the size of the global lighting market was about $96 billion, and LED devices accounted for about 12% of that amount. By 2020, McKinsey & Company projects, the size of the market will be $136 billion, of which 63% will be attributable to LEDs.

With the LED bulb, we have a trend that’s been in the making for several years… and it’s now ready to surge. How should an investor play it? Certainly not with a blindfold and a dartboard, or a whole sector buy like an ETF, because not all participants in this market will prosper.

Some will not be a pure enough play to benefit, or will be cannibalizing their own incandescent and CFL business… like GE and Phillips. Others will find themselves producing a commodity with ever thinning margins… like Cree. And others still already have much of the anticipated growth priced into their shares.
However, we scanned the field and found a company that is well positioned to benefit from the growth of the LED market while, at the same time, actually improving its margins.

We believe this company’s stock is undervalued. That’s why we’re recommending it in the next issue of BIG TECH

For access to this recommendation and many more, simply sign up for a risk free trial of BIG TECH. 

If you decide to keep your subscription, it will only cost a mere $99, nothing compared to the profits just this one investment should bring. But, if for any reason you’re unsatisfied, simply cancel to receive a prompt, courteous, and complete refund of the entire subscription price. You have 3 full months to make up your mind.

The article Thomas Edison’s Dream Smashed was originally published at Casey Research

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How a Big Cat Started Europe’s Addiction to Crude Oil

By Marin Katusa, Chief Energy Investment Strategist

On July 1, 1911, a German gunboat named Panther sailed into the port of Agadir, Morocco, and changed history. For the previous two decades, a faction within the British Admiralty had called for the navy to switch from coal fired ships to ones powered by a new fuel. Admiral John Fisher, First Sea Lord, led the charge, trumpeting oil’s numerous advantages: It had nearly twice the thermal content of coal, required less manpower to use, allowed refueling at sea, and burned with less telltale smoke.

Doesn’t matter, replied naval tradition: Britain lacks oil, and she has lots of coal. The switch would put the greatest navy in the world at the mercy of burgeoning oil rich countries and the oil trusts that operate in them. (It didn’t help that the navy’s first test of oil firing in 1903 engulfed the ship in a cloud of black smoke.)

It wasn’t common knowledge at the time, but Germany had surpassed the mighty British Empire in manufacturing in the late 1800s, most notably in the production of steel. Britain’s manufacturing base had largely moved abroad, taking investment along with it. Germany, meanwhile, was determined to build up the quality as well as quantity of its goods. That included its military technology and capacity, especially its navy. Has a familiar ring, doesn’t it?

Then came the Panther. Germany said she was there to protect German businessmen in restive Morocco, a reason more credible had there actually been German businessmen in Morocco. Britain read it as a challenge to its supremacy, a maneuver toward expansionism, and a threat to trade routes west out of the Mediterranean.

Britain’s young, up and coming home secretary wondered what specifications would be required to outmaneuver the ships of Germany’s growing navy. The war college gave a deceptively simple answer: a speed of at least 25 knots.

Coal couldn’t do it—too many boilers, too much weight, too long to build up a head of steam, too short a range. But oil could.

With the Panther’s arrival in Morocco, Admiral Fisher’s faction gained a new and eloquent advocate for converting the British Navy to oil, and it wasn’t long before Home Secretary Winston Churchill became First Lord of the Admiralty and the fellow whom history often credits with guiding the British Empire’s destiny with oil.

Germany’s Great Game

 

If Britain were to switch its navy to oil, it would need a secure supply of the stuff. Churchill saw that the struggling Anglo-Persian Oil Co. had the resources, but lacked the cash.

With Germany setting its cap for control of Middle Eastern oil—building a railroad between Berlin and Baghdad was the last straw—it wasn’t hard for Churchill to convince the Parliament that cutting a deal with Anglo-Persian Oil Co. was a good idea.

In exchange for an infusion of cash, the British government got 51% of the company’s stock. A hush hush rider on that deal was a contract for Anglo-Persian to supply oil to the Royal Navy, with very favorable terms, for the next 20 years.

All this happened just in time for the spark that finally ignited the Great War, or as we call it today, World War I. Because of Churchill’s preparations, among them a new class of oil-fired ships, Allied naval forces were able to restrict the flow of essential supplies to Germany.

By war’s end, every country realized the strategic importance of a secure supply of oil. The players have been maneuvering ever since.

Fast-Forward 100 Years—the Rise of Mother Russia

 

The fortunes of the various players may change, but the scrimmage remains the same. Oil does everything from power vehicles on land and sea to supply manufacturers with the building blocks of medicines, plastics, and a host of other products.

The Soviet Union was a global powerhouse and a major oil producer until its disintegration in 1991, and Russia then had to shop hat in hand for loans to keep its economy afloat. It was largely its oil and gas resources that have enabled Vladimir Putin, Russia’s canny and forceful president, to wrest his country back onto the world stage of heavyweights in recent years. The European Union is currently Russia’s largest customer.

Indeed, Europe is feeling the squeeze from Russia, which has gunned hard to make it easy to get its oil and gas, but not so easy to keep getting them. Putin will happily play hardball with any country that won’t meet his terms—just ask Ukraine—and doesn’t mind if others down the line feel the sting of his stick.

The EU-28 imports over 50% of all the energy consumed. Russia provides about one-third of all the oil and natural gas imported by EU-28. Germany is the largest importer of Russian oil and natural gas.

The member countries of the European Union may be cheering Belarus on, but they’re also taking the hint from Russia. And they’d better: Between growing demand in Asia and instability in the Middle East, the European Union faces some serious energy challenges.

Slowly but surely, Europe is waking up to its situation. Alternative energies are a noble goal, but the hard truth is that the technology isn’t there yet to replace hydrocarbon fuels. For energy security, there’s little choice for EU countries but to back the oil and gas companies that call Europe home.

“We must get on and explore our resources in order to understand the potential,” declared Britain’s energy minister in July. Other countries, such as Germany, are taking on this pursuit as well. We believe that governments and oil giants in other European countries will follow their lead.

This article is from the Casey Daily Dispatch, a free daily e-letter written by renowned investment experts in the fields of precious metals, energy, technology, and crisis investing. Click here to get it your inbox every day.

The article How a Big Cat Started Europe’s Addiction to Oil was originally published at Casey Research

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European Union Ban on Iranian Imports Give Crude Oil Bulls a Boost

March crude oil closed higher on Monday for the first time in four days after the European Union agreed to ban crude imports from Iran, raising concern that retaliation from the Islamic Republic may disrupt oil supply from the Middle East. A 27 nation bloc indicated that it would implement the crude embargo starting July 1 to pressure the country over its nuclear program.

Iran has threatened to close the Strait of Hormuz, the transit point for about a fifth of global oil, if its exports are banned. The high range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term.

If March extends this month's decline, December's low crossing at 92.95 is the next downside target. Closes above the reaction high crossing at 102.24 would confirm that a short term low has been posted. First resistance is the reaction high crossing at 102.24. Second resistance is this month's high crossing at 103.90. First support is today's low crossing at 97.40. Second support is December's low crossing at 92.95.

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The Unfortunate Truth About an Overbought Stock Market

Writing about financial markets is probably the most challenging endeavor I have ever immersed myself into. I am a trader first and a writer second, but I have really come to enjoy scribing missives about financial markets because it really forces me to concentrate on my analysis.

Writing for the general public has really enhanced my perception of the market and forced me to dig deeper and learn new forms of analysis. I find myself learning more and more every day and the beauty of trading is that even for the most experienced of traders there is always an opportunity to learn more. As members of my service know, I strive to be different than most of my peers as my focus is on education and being completely transparent and honest.

I want readers to know that I was wrong about my recent expectations regarding the European sovereign debt summit. I was expecting the Dollar to rally based on the recent price action and quite frankly I expected stocks to falter after running up nearly 15% into the announcement. My expectations could not have been more untimely and incorrect.

I share this with you because as I read and listen to market pundits discussing financial markets I find that too many writers and commentators flip flop their positions to always have the appearance of accuracy. In some cases, there have been television pundits that stated we were possibly going to revisit a depression in 2012 no more than 5 weeks ago. These so called experts have now changed their positions stating that we have started a new bull market in recent weeks. How can anyone take these people seriously?

Financial markets are dynamic and consistently fool the best minds and most experienced traders out there. Financial markets do not reward hubris. If a trader does not remain humble, Mr. Market will happily handle the humbling process for him. I was humbled this week. I was reminded yet again that  financial markets do not take prisoners and they show no mercy. I am sharing this with readers because I want you to know that I refuse to flip flop my position without first declaring that I was wrong.

When I am wrong, I will own up to it purely out of sense of responsibility. My word and my name actually mean something to me, and while I strive to present accurate analysis I am fallible and I will make mistakes. The key however to the mistakes that I make is my ability to learn from them and the past week was a great learning opportunity.

After regrouping and stepping back after the price action on Thursday, a few key elements really stood out to me regarding recent price action. First of all, in the short term we are extremely overbought. The chart below illustrates the number of stocks in domestic equity markets trading above their 20 period moving averages over the past 5 years:

Overbought Stock Momentum

What is apparent from the chart above is that prices are almost as overbought right now as they have been anytime in the past 5 years. The number of domestic equities trading above their 50 period moving average over the past 5 years is also nearing the highest levels seen during the same period as the chart below illustrates:

Trading Stock Market Momentum

Equities trading above the 100, 150, and 200 period moving averages are somewhat subdued by comparison meaning in the short run a possible correction appears likely. The longer term time frames are no longer oversold, but they have considerable upside to work with before we could declare that they are overbought.

Additionally, the details of the European Union’s supposed solution have not yet been released raising questions going forward. Every move that is made will create unintended consequences. As an example, since Greece had 50% of their debt written down why would Ireland or Portugal refuse to pay their debts in full?

The Irish and Portuguese governments are going to come under pressure from their constituents to renegotiate the terms of their debt based on the agreement that was made with Greece recently. Spain politicians will likely be under pressure as well. The decisions made in these so called bailouts reverberate across the geopolitical spectrum. Moral hazard still exists, it just evolves over time.

The risk premium of sovereign debt has to be adjusted since credit default swaps did not trigger payment as the write downs were considered “voluntary.” Thus credit default swaps are not the answer to hedge sovereign debt as it would appear that governments have the ability to write down debt without triggering a default based on the status of the write down. The long term unintended consequences could be severe and are unknown at this point in time.

In addition to the unknown factors impacting the European “solution”, next week the Federal Reserve will have their regular FOMC meeting and statement. There has been a lot of chatter regarding the potential for QE III to come out of this meeting. While I could be wrong, initiating QE III right after the Operation Twist announcement would lead many to believe that Operation Twist was a failure.

With interest rates at or near all time lows and the recent rally we have seen in the stock market, it does not make sense that QE III would be initiated during this meeting. It is possible that if QE III is not announced the U.S. Dollar could rally and put pressure on risk assets such as the S&P 500 in the short to intermediate term. If this sequence of events played out, a correction would be likely. The following is a daily chart of the S&P 500 with possible correction targets in place:

SPY Overbought Stock Market

Right now it is a toss up in the financial blogosphere as to the expectations of where price action will head. Are we near a top? Is this the beginning of a new bull market? I scanned through several charts Friday evening and Saturday morning and came to this realization. If the market is going to breakout and this is not a top but the beginning of a major bullish wave higher, then the Nasdaq 100 Index (NDX) has to breakout over the 2011 highs.

The Nasdaq 100 Index is comprised of stocks such as AAPL, GOOG, INTC, and YHOO. In order for a new leg higher to transpire, hyper beta names like AAPL and GOOG have to breakout higher and show continuation with strong supporting volume. If the NDX does not breakout over the 2011 highs, a top could potentially be forming. The daily chart of the Nasdaq 100 Index is shown below:

QQQ Overbought Market

In conclusion, the short term looks like a possible correction could play out. However, it is critical to note that the longer term time frames are more neutral at this time. Furthermore, if price action cannot penetrate the 2011 highs for the Nasdaq 100 Index, I do not believe that a new bull market will have begun. If the Nasdaq 100 Index cannot breakout above the 2011 highs, we could be putting in a potential top going into the holiday season.

In closing, I will leave you with the thoughtful muse of famed writer and minister Hugh Prather, “Almost any difficulty will move in the face of honesty. When I am honest I never feel stupid. And when I am honest I am automatically humble.”

Subscribers of OTS have pocketed more than 150% return in the past few months. If you’d like to stay ahead of the market using My Low Risk Option Strategies and Trades check out OTS at Options Trading Signals.Com and take advantage of our free occasional trade ideas or a 66% coupon to sign up for daily market analysis, videos and Option Trades each week.

J.W. Jones

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Commodity Corner: Crude Oil Settles Lower on Weaker Euro

Crude oil on the January contract ended the day at $81.74, a .24 cent decline from Friday, as the euro slipped 0.4 percent against the greenback. Although Ireland has agreed to a bailout plan from the European Union to shore up its banks amid a serious debt crisis, lingering concerns that Portugal and Spain are the next EU countries in line for bailouts were bearish for the euro. Because oil is priced in dollars, a stronger dollar makes it less attractive to buyers holding other currencies.

January crude traded within a range from $80.68 to $82.87 Monday. Oil settled at $81.51 Friday on the December contract, which has expired.

The National Weather Service expects the Midwest and Northeast to experience colder than normal temperatures through next week. Given the regions' anticipated greater electricity demand during this period, December natural gas settled 11 cents higher at $4.27 per thousand cubic feet. It traded from $4.125 to $4.28.

Although the American Automobile Association expects more motorists to be on the road for this year's Thanksgiving holiday, December gasoline ended the day a nickel lower at $2.15 per gallon. The front month gasoline price fluctuated Monday from $2.13 to $2.215.

Posted courtesy of Rigzone.Com

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Commodity Corner: Crude Oil Up 1.75% on Irish Expectations

Mounting expectations that Ireland will accept a bank bailout from the European Union caused the greenback to weaken, causing December crude oil futures to end the day higher Thursday.

Oil rose $1.41 to settle at $81.85 a barrel. After some reluctance this week, Irish government officials on Thursday confirmed that they were pursuing a loan from the EU to bolster the country's banking system. The Irish government's shifting position in turn provided some comfort to other EU economies grappling with their own debt crises. Moreover, it helped the euro to reverse recent losses and gain 0.8 percent against the dollar.

Front-month crude traded within a range from $80.44 to $82.35 Thursday.

Buoyed by the prospect of a busier Thanksgiving travel period this year, along with low East Coast inventories, gasoline surged more than three percent to settle at $2.23 a gallon. December gasoline traded from $2.16 to $2.24.

Natural gas for December delivery fell two cents to end the day at $4.01 per thousand cubic feet. The futures price fluctuated from $3.85 to $4.04.


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Phil Flynn: All The News That Is Fit To Ignore

Gee I miss the old days when a headline or two would get the oil screaming. When the markets feared that even the loss of just one drop of oil could knock the world out of its delicate supply versus demand balance. You remember those days not to long ago when the market soared on even the most mundane headline. Instead what we have now a lack of passion and that oh so boring market stability.

Oh sure oil may try to reluctantly breakout to the upside as it follows the stock-market on its earnings fueled optimistic rally yet deep down it really does not want too. You see the oil glut the likes of which we haven’t experienced in decades is leading to a drab oil market and heavens forbid less interesting Energy Reports, Oh No! So let’s pretend if only for today that these stories that used to drive markets wild actually still matter to price. Like for example say sanctions on Iran.

Something like, oil traders ran for cover as the long awaited sanctions on a still defiant Iran took hold. (Ok well everything is true except for the running for cover part) Iran’s President Mahmoud Ahmadinejad warned that sanctions imposed by arrogant Western powers will not slow their nuclear ambitions. (Yikes!) The European Union adopted new sanctions targeting Iran's foreign trade, banking and energy sectors brought sharp criticism from.....Read the entire article.

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Gas prices Rise, Iraqi Gas Headed For Europe

"U.S. Gasoline Price Rises to $2.3010 a Gallon, Lundberg Says"
The average price of regular gasoline at U.S. filling stations rose to $2.3010 a gallon as refiners cut production and inventories fell to the lowest since December. Regular gasoline climbed 24.61 cents in the three weeks ended May 15, according to a survey of 5,000 filling stations nationwide by Trilby Lundberg, an independent gasoline analyst. That’s an average 8.2 cents more a week, the biggest increase on that basis in a year. “Between our two survey dates this year, crude oil prices increased nearly $5 a barrel,” Lundberg said today in an interview. Gasoline consumption.....Complete Story

"US Geological Survey Spies 'Promising' Hydrate Reserve in GOM"
A research team led by the U.S. Geological Survey in search of producible hydrate to add to the nation's energy portfolio has identified "the most promising" gas hydrate deposits yet in the Gulf of Mexico, according to a report by Reuters. Researched for years as a potential new energy source, gas hydrate is a combination of nearly pure methane and water frozen by low temperatures and high pressures in permafrost or beneath the sea, the report noted. Prolific throughout the world, gas hydrate has not been commercially viable since most finds have been too shallow to tap for production.....Complete Story

"OMV, Mol Buy 20% of Iraqi Gas Producer to Supply Fuel to Europe"
OMV AG, central Europe’s biggest oil company, and Hungary’s Mol Nyrt. bought a combined 20 percent of an Iraqi natural-gas producer in a cash-and-stake deal, as part of a plan to supply gas to Europe through the Nabucco pipeline. OMV will pay $350 million for a 10 percent stake in Pearl Petroleum, which holds the United Arab Emirates’ Dana Gas PJSC and Crescent Petroleum’s upstream interests in the Kurdistan region of Iraq, the companies said in a statement today. Mol will own 10 percent of Pearl in exchange for Dana and Crescent each becoming 3 percent shareholders in the Hungarian refiner.....Complete Story


Today’s Stock Market Club Trading Triangles


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Haliburton Profits Tumble, Oil Falls the Most in Seven Weeks

"Oil Falls the Most in Seven Weeks as Dollar Gains, Stocks Drop"
Oil fell the most in seven weeks as a stronger dollar reduced the appeal of commodities and on speculation supplies will rise as the recession reduces demand.

Oil dropped as the dollar rose to a one-month high versus the euro, making crude less attractive as a currency and inflation hedge. An Energy Department report last week showed U.S. crude oil inventories climbed to the highest level since September 1990 as demand dropped.

“The strength of the dollar has prompted a selling in the oil market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We repeatedly shift from concentrating on the fundamentals of high inventories and low demand on one hand and hopes of recovery later this year. The fundamental picture has reasserted itself today.”....Complete Story

"Halliburton 1Q Profit Tumbles, Cuts Jobs"
Halliburton Co. kicked off the oil sector's first-quarter earnings period on a dour-but-not-unexpected note Monday, reporting net income that tumbled 35 percent from a year ago and offering a poor outlook. It also said it cut more than 2,000 jobs in the first three months of the year.

The company, which has corporate headquarters in Houston and Dubai, was hurt as oil and natural gas producers, stung by low prices, cut back on exploration and drilling, particularly in North America. That's bad news for service companies like Halliburton, which help producers with drilling, reservoir management and other oilfield work.

A major barometer of oil-patch activity is the U.S. rig count, which has fallen more than 50 percent since the end of August. Analysts say the count is likely to fall even more — perhaps another 20 to 30 percent — as producers continue to scale back spending amid bloated oil and gas supplies and weak demand....Complete Story


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Reasons To Be Bullish On Crude Oil

With crude oil prices dropping on lower demand there seems to be crude bulls coming out of the woodwork. Why? There are plenty of reasons.....

Reason One.....
It appears that the recent OPEC production cuts are starting to be effective.

Reason Two.....
With Hamas rocket attacks on Israel finally being responded to, natural gas controversy in Europe and civil war in Nigeria the geopolitical front is having an obvious effect.

Reason Three....
The Bush administration and the current Energy Department has begun scheduling the purchase of crude oil over the next few months to replace oil drawn from the Strategic Petroleum Reserves during last years hurricane season. This could add up to 25 million barrels this year alone.

Reason Four...
The Chinese government has announced that it will be buying another 19 million barrels for the own reserves over the next few months. They will also complete the next phase of construction on storage facilities adding another 170 million barrels of storage capacity.

For now the trend has shifted sideways to higher for crude oil. But ultimately, regardless of all of these reasons to be bullish, the U.S. and now the Chinese consumer remains in the driver seat, literally.