In April, the call was that Chicago Bridge & Iron (NYSE: CBI) was undervalued at $7.31. If you bought CBI in April, you're up 178%. Not bad.

Moreover, it goes without saying that I'm reiterating my Buy rating for CBI, first recommended on April 6, 2009.

A couple of months ago, I would have bet that oil would probably peak out this summer in the upper $60's, and possibly move back through the psychological $70 mark, but it is starting to look like I would have been wrong. We have yet to hit the heart of the high demand summer driving months, and oil is already poised to break through $70 a barrel.

When we looked at oil prices yesterday we mentioned that the first place you are going to feel the recent jump in price is going to be at the gas station. And today, you will be seeing another slight jump in price as the national average for a gallon of gasoline moved over a penny higher last night to a current national average of $2.525.

Oil prices have dropped sharply today as traders focus on increased demand concerns following this week's oil inventory report.

Going into today's inventory report, analysts were expecting to see an increase in oil reserves of around 1.5 million barrels. However, the market was shocked to see that the actual increase last week was well above that figure, as the Energy Information Agency announced that inventories grew by 6.7 million barrels.

The result? Oil prices have dropped over 9% in today's market, falling $4.54, down to $44.04.

Crude oil has risen 52% from its December 19th low of $33 a barrel to $50. Can gasoline prices be far behind?

What's behind the move? Supply is down. For example, Kuwait and Qatar indicated they will implement the supply cuts that OPEC announced last month. A dispute between Russia and Ukraine reduced natural gas shipments to Europe -- it must be cold there. And Iran is calling for a suspension of crude exports to Israel's allies as the conflict between the Israeli army and Hamas hits its 11th day.

Will demand fall further as prices rise? That seems to be the only hope for a reversal in the price of oil. But so far there seems to be a bit of a delay between the rising price of crude and the price of gasoline. So if you're paying $1.66 now it looks like $2 won't be too far away. Maybe it's not too late to look into buying energy stocks.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Yesterday, I was pleased to pay $1.66 for mid-grade gasoline and I was wondering whether it would drop further or rise. But now I have an answer -- Israeli attacks in Gaza Strip are enriching the oil-producing countries that surround it. More specifically, oil prices have increased $3 a barrel to more than $40, while the price of gold is up 2% to $881.85 -- a 30% rise above its 13-month low two months ago.

Will the violence in the Middle East continue? If so, for how long? My guess is that Israel is planning a ground war which will last for several weeks -- the timing of the move takes advantage of the transition of power between Bush and Obama and posturing before January's Israeli election.

In the meantime, the key question for investors is whether they should buy energy stocks -- they will almost certainly rise today and will continue to go up as long as the possibility remains of escalation -- in the form of an military or economic attack, such as an oil embargo, on Israel and Western interests from other Middle Eastern countries. If there is an escalation, we could see a big spike in oil prices which would help energy investors.

But that could cause an even deeper economic slowdown which would cause oil prices to collapse even more once the violence ends.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book, You Can't Order Change: Lessons From Jim McNerney's Turnaround at Boeing, was published by Portfolio on December 26, 2008

Oil prices are getting a big boost today, as investors are betting on hearing news of huge production cuts coming out of OPEC this week.

With oil well off its highs from over the summer, many had already been expecting to see OPEC step in and cut production, but earlier this month OPEC made it clear that it wants to shock the market into sending prices higher.

Prices have moved up over $50 a barrel today, hitting a high of $50.05, but have cooled off slightly and are currently sitting at $49.25, up $2.97 as we await to hear exactly how deep the production cuts could run.

OPEC nations had their most profitable half-a-year ever. According to the FT, "Members of the Saudi ­Arabia-led oil exporters' cartel took home $645bn (£335bn, €430bn) between January and June." That number could get even better in the second half.

OPEC may be doing exceedingly well and it may be building huge sovereign funds to invest in crippled financial companies in the US and EU, but it is taking on a substantial risk.

OPEC has kept is production fairly flat. The organization has done very little to abate the run-up in oil prices. That run-up has been the one of the two or three largest contributors to a slowdown of economies in the West.

A full-blown and deep economic recession is likely to spread from the West to China and India. If the US consumer cannot afford much beyond his mortgage, gas, and food, imports will suffer, perhaps substantially. Falling demand for imports in the US could spread to the energy-hungry countries of the developing world. In other words, demand for crude could collapse as demand for exports falters.

A sharp drop in oil demand could do terrific harm to the pace at which OPEC takes in cash. Record income may seem good for now, but it could drive very unpleasant and unintended consequences.

Douglas A. McIntyre is an editor at 247wallst.com.

You have to admit there's something ironic, almost comical, about this, but it's true: General Motors Corp. (NYSE: GM), whose domestic sales are in a major slump, said it plans to sell hybrid vehicles in the Persian Gulf. The Persian Gulf, where gasoline sells for anywhere between $0.78-$1.57 a gallon! Sell hybrids there. That almost sounds like a joke.

Well, it ain't no joke at all. The strategy, it seems, is to allow Middle Eastern buyers the choice of a bigger car. It's a plan cooked up by Terry Johnsson, president of GM's Middle East unit. Perhaps he's got a point. With their economies booming as a result of record-high oil prices, the region was responsible for 50% more GM SUV sales in May, the opposite of the trend seen in the company's U.S. sales.

So despite the Middle East being a small market in terms of global sales, GM plans to capitalize on its wealth. If the concept of hybrids in Bahrain (starting in the fourth quarter) still strikes you as odd, you may want to consider that the region is becoming increasingly environmentally friendly, says Johnsson. Considering that most countries in the Gulf rely on oil as a source of revenue and income, that's ironic too, isn't it?

While the American consumer for years preferred the bigger car, ignoring environmental and oil supply concerns, oil-rich countries have planned for the day it runs out, trying to get into other industries, such as tourism. Not to mention that the consumers there are also considering the environment. So in one more twist of the fate, GM, who has been pushing the big cars, is now feeling the consequences. How can so many have suffered from such poor foresight?

It seems a bit odd, but Toyota Motor Corporation (NYSE: TM) is an American auto exporter. It has been sending U.S.-made Avalon sedans to the Middle East for about a year. And now comes news via our pals at Autoblog that it will start shipping Sienna minivans and gigantic, American-style Sequoia SUVs to the Middle East as well.

No doubt this comes as good news to Toyota's American employees. Unlike competitors Ford Motor Company (NYSE: F), General Motors Corporation (NYSE: GM) and Chrysler, Toyota has avoided laying off employees, but it has slowed production in recent months. With the new export plan, production is being increased at its state-of-the-art plant in Princeton, Indiana. That's pretty impressive, given that the American domestic car market will likely shrink by a million cars this year.

More interestingly, though, this raises the always tricky question of the national identity of global manufacturers. Is a Toyota Avalon made by American labor in Indiana an American car? How about a Buick made in Canada? Or a BMW produced in South Carolina? Not easy questions to answer. Profits end up in one country, wages in another -- and capital investment perhaps in a third.

Whatever your answer, the issue serves as a useful reminder of two things: 1) the global economy is extremely complex, and 2) Toyota is beating the American automakers at their own game.

Just a year ago, if you mentioned "sovereign wealth funds," you probably would have gotten a blank stare. But, of course, this is now the hot thing in finance. More importantly, it looks like sovereign wealth funds are poised for strong long-term growth. In fact, Lehman Brothers (NYSE: LEH) recently set up a division to capitalize on the mega trend.

Sovereign wealth funds are found in many countries in Asia, Africa, Europe and the Middle East. It's the inevitable consequence of some major forces: strong economic growth in emerging economies, the fall in the US dollar and spikes in commodities prices, especially oil.

Global Insight, a research firm, estimates that sovereign wealth funds have grown an average of 24% per year for the past three years. They have about $3.5 trillion in assets, which is more than private equity and hedge funds combined.

No doubt, sovereign wealth funds have become a key element in global finance. For example, they contributed to about 28% of M&A deals (in January 2008) and about 10% of private equity transactions.

Global Insight forecasts that – by 2015 – sovereign wealth funds will exceed the value of the GDP of the US economy. And, I'm sure, the funds will also own a big chunk of it as well.

Tom Taulli is the author of various books, including The Complete M&A Handbook (www.mergerbook.com) and is also a principal in Averiware, which provides an ERP system to small and midsize businesses.

As Joseph Lazzaro wrote earlier today, oil prices were surging once again in today's market, and traders set a new record, pushing prices up as high as $114.08 today.

Fueling today's rally were concerns over global supply, as news spread that Russian oil production has fallen this year. This is the first time in a decade that Russia is seeing a decline in its production.

Russia is not the only country making headlines. We were also given the news that China had a massive jump in its diesel oil imports last month of a remarkable 49%. So, we are being given both the news that Russia is producing less, while China is demanding more; the perfect recipe for a strong day for oil prices. Other oil producers, Mexico and Nigeria, announced that they had temporarily shut down some of their production as well.

After yesterday's big jump in oil prices, it looked as though we might see the precious crude break through the psychological $110 barrier today, but that has not been the case. Oil hit a high of $109.64 earlier in the session, but is currently trading in the red at $108.38, down $0.71.

Yesterday's move was more a result of traders betting on future interest rate cuts that it was fundamentals justifying oil trading around the $110 mark. As recession fears continue to linger, you can be sure that interest in commodities will remain high, and oil prices will keep trading at near record levels for at least a little while longer.

Also, as I noted last week, we are quickly approaching the summer driving months. As we see gasoline prices at record levels, we have to expect to see prices creeping even a bit higher as demand starts to build this summer. In fact, last week we were given data that gasoline inventories were falling and demand was increasing. This was the first time since back in January that gasoline demand rose.

Oil prices are off to a strong start this week, as traders are pushing prices higher in reaction to multiple concerns stemming out of the Middle East.

The first factor that is weighing on traders mind's is the Turkish invasion to Iraq. Tension between Turkey and the Kurds in Northern Iraq is nothing new to the area (and violence between the two goes all the way back to 1984), but the current activity is the first confirmed operation by Turkey since the United States began its Iraqi campaign in 2003.

Over the weekend, Turkey announced that one of its helicopters had gone down in Northern Iraq, killing 8 Turkish soldiers. In reaction to that news, Turkey stepped up its force by firing in excess of 40 salvos of artillery into the territory.

The trade deficit declined 6.9% to $58.8 billion in December 2007, as exports rose and imports fell, the U.S. Commerce Department announced Thursday. The figure was below the $61.6 trade deficit estimate.

For 2007, the trade deficit fell 6.2% to $711.6 billion, down from the record $758.5 billion recorded in 2006.

Monthly export record

December 2007 exports rose to a record $144.3 billion while imports declined for the first time in four months to $203.1 billion. Export activity remained strong to China, the Asia region, and South America. Exports of industrial supplies, civilian aircraft, capital goods, and consumer goods were particularly strong.

Economist Steve Affinito told BloggingStocks Thursday that in addition to a weaker dollar, which makes U.S. exports cheaper, the nation's exporters are demonstrating that they can find ways to maintain / increase international sales, even amid more-challenging economic conditions.

Trade: U.S. bright spot

"Across the board, companies are performing well on the export front, as U.S. goods, particularly high-value added items like aircraft, remain very competitive," Affinito said. "For the longest time trade had been a drag on U.S. GDP, but now it's starting to be a positive, which is good news for U.S. companies, employees, and the U.S. economy. The improving trade deficit picture is one of the few bright spots regarding the U.S. economy right now."

President Bush recently submitted a $3.1 trillion dollar budget to congress with the biggest proposed increases in defense spending, and homeland security. The Pentagon would get a $35 billion increase to $515 billion for core programs, about 7% with war costs additional (but how much is additional?) This further supports my investment posture for this year and next that the defense sector is the place to be as I posted earlier today and many times over the past few months -- the BIG BUYS.

Some of our big defense contractors, all of which should benefit to some degree include: Boeing (NYSE: BA), General Dynamics (NYSE: GD), Lockheed Martin (NYSE: LMT), Northrop Grumman (NYSE: NOC), Raytheon Company (NYSE: RTN), and United Technologies (NYSE: UTX). I am not suggesting that you jump into these stocks immediately, but you should add them to your watch list. Perhaps, for some investors dollar cost averaging into them over six months would make sense. Each has a varying degree of exposure to defense spending. For example, United Technologies is the parent of Sikorsky helicopters which makes the Black Hawk. Lockheed Martin and Boeing make fighter jets. Raytheon makes defense electronics and missile while General Dynamics and Northrop Grumman supply warships to the US Navy. Northrop also makes aerial vehicles that are being used in the Iraq War.