MOST NOTEWORTHY: Wachovia, American Electric Power and Consol Energy were today's noteworthy upgrades:

• Deutsche Bank upgraded Wachovia (NYSE: WB), citing valuation and recent capital actions.
  
• Bank of America upgraded American Electric Power (NYSE: AEP), citing the new Ohio rate structure which will provide steady growth.
  
• Merrill upgraded Consol Energy (NYSE: CNX) based on higher coal prices.

OTHER UPGRADES:

• Goldman upgraded the Integrated Oils sector based on risk/reward relative to oil prices. ConocoPhillips (NYSE: COP) is the firm's favorite pick.
  
• Affiliated Computer Services (NYSE: ACS) was upgraded to Buy from Neutral. Goldman expects Affiliated to do well in the current slower macro backdrop and views shares as relatively insulated to government cutbacks.

Readers of this space know that one of the preferred sectors is oil and oil services. Given oil's importance in a growing global economy, oil and oil services companies are likely to continue to experience steady demand for their services/products. And with above in mind, ConocoPhilips is worth a review.

ConocoPhilips (NYSE: COP) is the third largest oil company in the United States. With proven reserves of 35 billion barrels of oil, COP has the oil assets, upstream production and -- equally important -- downstream refining capacity to benefit from both oil's current high price and its likely, continued ascent, long-term.

Further, COP's 12 U.S. refineries represent the most compelling operations positive for the next 3-5 years ahead. In addition, COP has a $3 billion plan in place to expand the company's ability to refine heavy sour crude oils.

ConocoPhillips said it now expects Q4 production to exceed Q3 production by 60,000 barrels of equivalent oil, to about 1.86 million barrels of equivalent oil, the company announced Thursday in a statement.

Conoco (NYSE: COP) also said it expects both Q4 crude oil and U.S. natural gas prices to be higher on a sequential basis. Conoco's shares gained 82 cents to $88.71 on the news in Thursday afternoon trading.

The company said it also expects an after-tax negative impact of about $250 million for Alaska's new production tax. About $100 million of that amount is for the 2006 and 2007 periods. Conoco said it also expects a $350 million revenue gain stemming from Canada's tax-rate reduction act and the release of specific escrow funds.

ConocoPhillips also expects domestic refining and marketing margins to decrease slightly in Q4, offset by a higher, average, worldwide crude oil refining capacity utilization rate.

Stock Analysis: First recommended in this space in October 2007 at about $85, ConocoPhillips is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon of at least one year who need an integrated oil stock / energy stock should benefit from COP's shares. Sell / Stop Loss if you were to purchase shares in this company: $58.

DISCLOSURE: Joseph Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Rising global demand for oil, combined with geological studies that predict that global oil production derived from conventional oil supplies will begin to decline late in this century, or as early as 2040, has led to a search for unconventional oil supplies.

Further, a large amount of that unconventional oil exists in the form of tar sands in Alberta, Canada, the bitumen of which is capable of producing 1.7 billion barrels of synthetic crude. Moreover, if just 10% of this field is actually recoverable, it would still represent the second largest oil reserve in the world.

But, as writer Elizabeth Kolbert outlined in an article on unconventional oil in this week's issue of The New Yorker magazine ("Unconventional Crude"), extracting that resource comes at a price: it's more expensive to extract -- about $1 of energy is needed to generate $3 of unconventional oil -- more CO2 is also released into the atmosphere than from conventional oil, and mines dug to secure the material scar the landscape, if not fully restored.

Once gain, oil traders are saying oil is overbought, short-term, and once again, oil moves toward the stratosphere.

Oil gained 95 cents to $97.25 Wednesday, touching $98.62 earlier, after the U.S. Energy Department reported that U.S. crude oil inventories fell by 821,000 barrels for the week ending November 2, and on temporary oil production shutdowns in the North Sea. In addition, heating oil gained 2.62 cents to $2.6295 and unleaded regular gasoline rose 1.77 cents to $2.4470.

BP Plc (NYSE: BP) and ConocoPhilips (NYSE: COP) said they plan to curb output in the North Sea starting Wednesday night before storms batter the area, Bloomberg News reported Wednesday. That only added to traders' jitters regarding the U.S. market's ability to remain well-supplied heading into the Northern Hemisphere's winter.

"Globally, oil markets are well supplied, but for the U.S., anything, a North Sea shutdown, a cold snap in the northeast, can send oil up another $2 or $3," one oil trader said to BloggingStocks. "The market has discounted $100 and $110 looks like the next target."

Vicious circle

Further, the oil market, in addition to a geopolitical premium and a trader/speculator premium, is now being plagued by a "vicious circle" involving the dollar and oil, according to Jim Dietz, an independent energy trader.

With the stock market in a choppy/consolidation mode (or perhaps worse), it's a good time to consider defensive/consumer plays. Over the next two weeks we'll review several battle-tested blue chips which fit the aforementioned bill, and that may warrant inclusion into your portfolio.

In choppy markets combined with elevated oil prices, the integrated oil sector has appeal, and among these ConocoPhilips (NYSE: COP) is worth a review.

Conoco, with proven reserves of 35 billion barrels of oil, has the oil assets, upstream production and -- equally important -- downstream refining capacity to benefit from both oil's current high price and its likely, continued upward price arc. Contributions from its Burlington Resources acquisition should maintain double digit oil production increase for years, but COP's 12 U.S. refineries represent the most compelling fundamental statistic for the next 3-5 years ahead. COP has a $3 billion plan in place to expand the company's ability to refine heavy sour crude oils.

Most readers, and certainly trader/investors have heard of OPEC -- the Organization of Petroleum Exporting Countries that controls about 35% of the world's oil production.

On Friday, OPEC, as expected, voted to keep oil production at current levels. Analysts considered it a prudent move, given the fact that, despite a slowing global economy, demand for petroleum-based products remains strong, which has helped keep oil's price above the $55/barrel level.

Prior to the meetings, several price-hawk OPEC members had floated the idea of a production cut, arguing that the global economic slowdown could propel a substantial drop in oil's price, perhaps to below $40 per barrel. However, with no let-up in demand seen in either the Western or Eastern hemispheres, and oil showing few signs of falling below $50, let alone $40, the decision by OPEC to maintain the status quo regarding production was the appropriate choice, in the view of most oil analysts.

Still, the OPEC cartel has not been known for placing the interest of the global economy over the cartel's interest. OPEC was responsible for the devastating 1973 oil shock, and has not been too effective at reigning-in hawkish members, such as Iran, who helped precipitate the world's second oil shock, in 1979.

Way back, it seems now, in the 18th century -- no, actually, just in the 1980s, the rock group The Tubes released an album titled, "The Completion Backward Principle" -- a solid album, with several hits.

Well, right now the crude oil and gasoline markets are an example, of sorts, of "The Completion Backward Principle."

Most consumers know that when the price of crude rises, a rise in the price of gasoline follows, as most U.S. gasoline is a petroleum-based product. But what many consumers do not realize is that the reverse -- or "the completion backward principle" -- is also true: A rise in the price of gasoline can drive the price of oil higher and/or keep oil's price elevated.

Typically, The U.S. presidential race starts about one year before the general election in November.

However, the lack of a presidential incumbent running for re-election in 2008, the increased influence of the Internet - - which tends to both compress and front-load the news/information cycle - - and the earlier 2008 presidential primaries, has forced A-list nomination candidates to start their nomination campaigns (and fundraising) sooner.

With the above in mind, here's an early, initial Wall Street analysis of each presidential candidate - - the likely net effect each would have on the markets and the U.S. economy.

Crude oil's dip below $59 early in Monday's trading session gave oil bears -- those who believe the price of a commodity will decline -- some encouragement, but the bears' brighter day may be short-lived, and pyrrhic.

Since oil's drop from the July 2006 high of around $78 to about $60, each news item suggesting greater-than-expected-production has prompted renewed optimism regarding another price break, perhaps below $50 or even $40.

Monday was a classic case in point, with oil falling below $59 after Bloomberg News reported that the Organization of Petroleum Exporting Countries (OPEC) won't reduce output at a meeting in Vienna this week.

If OPEC does not reduce output, that would be a bearish data point for oil, short-term. However, that one data point does not change oil's long-term supply and demand characteristics: Fed by large increases in demand from emerging market economies (particularly China) and by steady demand from other developed economies, global demand is increasing, and the cushion between global daily oil demand and daily oil produced (or supplied) is small.

Crude oil, which has declined about 15% since mid-December 2006 -- from $65 / bbl. to about $55 / bbl -- shows signs of declining further, but analysts indicate it's too soon to tell if there has been a major change from an oil bull market to a bear market.

For more than three years the price of oil has increased, driven primarily by surging demand in Asia (primarily China), solid demand in the Western hemisphere, gasoline refinery constraints in the U.S., and geopolitical concerns (Iraq War, Nigeria's civil conflict).

The above factors, combined with oil producers' inability to bring new supply on-line quickly, produced an alarming bullish scenario of steadily rising distillate and gasoline prices, and the specter of $100 / bbl oil.

However, as noted, oil has recently sold-off sharply, and drifted toward key support levels at $55. Is the oil bull market over? Tom Bentz, oil broker with BNP Paribas, told Bloomberg News that "Traders have made the decision that no matter what type of winter we have, it's too little, too late" because inventories are high enough to get through the rest of the season."