PetroChina (PTR) closed April 1 at $119.13. WTI Crude Oil Futures are recently up .65% to $85.42 according to Bloomberg. PTR April put option implied volatility is at 25, May puts are at 28, June is at 30; below its 26-week average of 32 according to Track Data, suggesting decreasing price movement.

Baidu (BIDU) closed at $600. BIDU overall option implied volatility of 40 is near its 26-week average of 42, according to Track Data, suggesting non-directional price movement.

Update is by Stock Specialist Paul Foster of theflyonthewall.com

Oil prices have been steadily rising, and today hit levels that we have not seen in 17 months for the precious crude.

A major reason why oil has been so strong lately is the weak U.S. dollar, which further weakened today in the wake of a worse than expected jobs report.

Thursday morning, it was announced that British petroleum firm BP (BP) will pay $7 billion for a group of Brazilian assets held by American firm Devon Energy (DVN). In exchange, Devon will receive half of BP's Kirby assets in Alberta, Canada for $500 million.

BP believes the its entry into Brazil will "add a major position in another attractive deep-water basin." BP will dish out $7 billion for interests in 10 exploration blocks in Brazil, 240 leases in the U.S. Gulf of Mexico deep water, and a nearly 6% stake in an Azerbaijan development. As a result of the deal, BP will have complete control of the Kaskida field in the Gulf of Mexico.

This morning the big news of the day was the drubbing of European stock markets as fear spread throughout the region. Fear was generated by concern that some European countries could default on their sovereign debt. Among them are Greece, Spain, and Portugal.

Greece's budget gap is 12.7% of GDP Greece has to slash spending and may need IMF assistance.

Investors sold investment deemed risky such as commodities, gold and stocks and moved their money into bonds. This started a selling frenzy in commodities with oil falling $3.14 per barrel to $73.14 per barrel. Brent crude fell $3.79 per barrel to $72.13 per barrel.

According to the Commerce Department, the U.S. trade deficit narrowed by 7.6% in October to $32.9 billion as exports increased faster than imports. Analysts had expected the trade gap to widen to show a deficit of $37 billion. The trade deficit for the year now stands at $304 billion, which is down from $610.8 billion this time last year.

The biggest reason for the lower deficit was a decrease in the importing of crude oil. That said, the trade deficit with China continued to increase, expanding to $22.7 billion in October, compared to $22.1 billion in September. The current deficit with China is at its highest level since last November. The year-long deficit with China is now $188.5 billion.

You can tell the oil market's in rough shape when companies are drilling more to pull in smaller profits. This is the situation in which Halliburton (NYSE: HAL) finds itself, with lower energy prices pushing down the cash that comes through the door.

So, its revenue was up for the most recent quarter, but earnings were down. The $262 million that came to the bottom line is 61% lower than the profit for the same quarter the year before.

This morning, oil firm Halliburton (NYSE:HAL) posted second-quarter earnings and a warning about North American natural gas markets. First things first, HAL reported second-quarter earnings of 30 cents per share (excluding a $12-million charge stemming from job cuts). While these results were far worse than the 55 cents per share the company earned a year ago, they still managed to top the consensus estimate by four cents per share. The situation was the same for quarterly revenue, which fell to $3.49 billion (from $4.49 billion a year ago) but still managed to outpace the Street's expectations - which called for $3.41 billion.

Yesterday, Bank of America Merrill Lynch decided to up its rating on Anadarko Petroleum (NYSE: APC) to "buy" from "neutral" and raised the company's price target to $57 per share from $52 per share. The main reason for the upgrade was the company's success in raising $1.3 billion in a stock offering.

In my opinion, this is a rather bold move, mainly based on the target price for the stock. Perhaps the company does have a solid balance sheet, but it also faces some rather staunch resistance. The stock is hovering in the $41 region and is positioned beneath its 10-, 20-, and 50-unit weekly and monthly moving averages.

Oil prices have dropped a bit this morning, challenging support at the $70 level, due mainly to what some call "mixed signals" about the U.S. economy. The black gold has backed off as data pointed to the fact that the U.S. economy is still weak, even if it is emerging from the recession.

On Tuesday, the Federal Reserve announced that industrial production dropped more than expected during May, which has triggered the new weakness in the oil patch. Crude prices have also felt the sting of the market's early week weakness as the Dow Jones Industrial Average has backed off from its recent rally. In addition, the dollar has played an important part in crude prices. A weak dollar leads to higher oil prices as commodities are considered a safe-haven investment against a weak dollar.

Is there a big commodities rally underway? Let's look at the numbers:

• The Commodity Research Bureau index (CRB) of 19 energy, metal and agricultural prices gained 14%, the most since 1974
• Gasoline soared 30% in May
• Gold and copper also surged
• Corn and soybeans reached their highest levels since last September
• Crude oil has jumped 29%, the most since 1999
• Gasoline futures for June delivery surged 31%, the most since 2006
• Cotton futures were up
• Gold is at $980.00 per ounce
• Silver posted the biggest monthly gain in 22 years

So you are probably asking: What is fueling this rally?

While I was not a finance major in college, I do know a few things about supply and demand. If there is ample supply and lower demand, prices should be low. If there is limited supply and high demand, prices should be high. I guess oil investors never really studied supply and demand economics.

Black gold is higher in European trading, as investors believe that the U.S. recession may have bottomed. Such a bottom could signal rising demand, which is enough for beleaguered black gold investors. In fact, Gerard Rigby from Fuel First Consulting in Sydney, Australia, noted, "The feeling is we've seen the worst of it, and the only way now is up . . . Some of this is also a trading momentum play."

Chevron (NYSE: CVX - option chain) stock is falling today after the company warned Thursday after market close that its first-quarter earnings will be lower than previous quarters, due to a weaker dollar and lower oil prices during the period. CVX reports earnings on May 1. Also, not helping are crude oil futures, which are sliding by more than 5% on the session after the International Energy Agency forecast slowing demand. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on CVX.

This morning, CVX opened at $67.45. So far today the stock has hit a low of $66.52 and a high of $67.74. As of 11:40, CVX is trading at $67.17, down $2.06 (-3.0%). The chart for CVX looks bullish and S&P gives CVX a positive 5 STARS (out of 5) strong buy ranking.

What is going to happen with crude? Two sessions ago, black gold dropped 7% to trade in the $35 region. Yesterday, crude hovered near break even. Today, we have the weekly crude inventory report -- which should have a modicum of impact on crude's price.

What I find interesting is the fact that we haven't seen the relief at the pump yet. I know that the Cushing, OK reserve is fully stocked and some of the crude sent to the stations is still from a time when black gold was worth more. But we have to be getting close to the $35-per-barrel stuff, right? I know right now I pay roughly $2 per gallon -- and I know, I should quit whining, but still....

For those that had the fortitude to pull the trigger, shorting crude back in early July when all the perfect storm conditions for $200 per barrel oil were on the horizon ... and had the stones to stay with that trade ... made a killing.

This is one of the greatest reversals for any major market of any kind that has ever occurred. And it clearly shows how the crude oil market was being manipulated by speculators and hedge funds.

The impact was fatal for hundreds of small airlines and small- to medium-sized trucking companies, along with thousands of other companies that didn't hedge against the price explosion in energy.

The price of crude, which topped out at $147 per barrel in July 2008, crashed to $35 per barrel by Dec. 18 -- a 76% haircut -- before getting a bid that got the price back above $40 on the eye-popping headline that OPEC would slash daily production by 4.2 million barrels.

This oil trade takes the cake.

At the zenith of the speculative bubble in the oil patch -- when crude hit $147 per barrel in July -- you had everyone from T. Boone Pickens to Prince Alaweed touting $200-per-barrel oil by the end of the year.

Crude is now trading around $40 -- down $107 per barrel in less than six months. Unbelievable!

And this latest drop comes after OPEC voted to cut daily production by an eye-popping 4.2 billion barrels per day.

Looks like the world is awash in crude oil.

Needless to say, those euphoric longs in the oil stocks got destroyed. Most energy stocks lost 50% to 70% of their value during the course of the sell-off in crude.

And remember those television commercials with T. Boone and Chesapeake Energy (NYSE: CHK) CEO Aubrey McClendon pushing for the expansion of natural gas?

Well, natural gas prices are down 60% from their mid-year highs.

If you put money into T. Boone's Clean Energy Fuels Corp. (NASDAQ: CLNE) as recently as September, when the stock was trading at $20, you now own Mr. Pickens' vision for $5.