Month of February, 2008

The Fed reduced interest rates again by 50 basis points to 3% and oil prices climbed on the news. Meanwhile OPEC will not increase quotas keeping the pressure on oil prices. But crude stocks in the US continue to climb and refineries continue to reduce utilization.

Oil remains in tight supply keeping pressure on prices and interest rate cuts reflect themselves in a weaker dollar placing further upward pressure. What remains to be fully factored in by markets is the impact of the US slowdown on demand.....

It’s a funny thing that I have remarked on in previous IssueAlerts but why is it that when oil prices rise, the media and Politicians have lots to say but when prices fall it’s almost so silent you could hear a pin drop? Well, don’t rush to send in emails because it’s a rhetorical question and I know the answer already. Crude oil prices have fallen below $90/bbl in recent days as analysts become increasingly concerned about demand in a possible US-led recession.

UtiliPoint International, Inc. is pleased to announce the dates and location for its first European Executive Summit. The event will take place on April 28 & 29, 2008 at the Hotel Palace Praha, in Prague, Czech Republic.

As a thought leader to the European utility industry, and longtime source of independent research-based information worldwide, UtiliPoint provides actionable industry knowledge and advice that serves its international clients' need for trusted solutions that allow them to thrive in the dynamic energy and utility business.

Blogs are attracting more and more visitors each day on the Internet and are proliferating quickly.

According to Wikipedia, a blog is a website where entries are commonly displayed in reverse chronological order. Many blogs provide commentary or news on a particular subject; others function as more personal online diaries. A typical blog combines text, images, and links to other blogs, web pages, and other media related to its topic. The ability for readers to leave comments in an interactive format is an important part of many blogs.

There are now many energy, natural resources and commodity targeted blogs including UtiliPoint's own such as www.etrmcommunity.com and www.utilipointeuropeblog.com. But how widely read are they by energy industry professionals, and how many energy companies today actively use blogging to communicate?

A date for your diaries... book your spot at the UtiliPoint European Executive Conference on energy & Utilities in Prague.

UtiliPoint International, Inc. is pleased to announce the dates and location for its first European Executive Summit. The event will take place on April 28 & 29, 2008 at the Hotel Palace Praha, in Prague, Czech Republic.

As a thought leader to the European utility industry, and longtime source of independent research-based information worldwide, UtiliPoint provides actionable industry knowledge and advice that serves its international clients' need for trusted solutions that allow them to thrive in the dynamic energy and utility business.

This summit is designed to bring together all top tier service providers to discuss the advances and challenges of the European Utility Market, including:

* Smart Grid
* Energy Trading Risk Management
* Environment
* Status of European Retail Markets
* Customer Service

Join us where you will also hear UtiliPoint's latest research on Market Sizing and Vendor Ratings.

The EHFC Directory of energy hedge funds now lists more than 630 funds of which 362 are energy-specific funds and 272 are energy-related funds. Additionally, we are now listing 210 commodity trading funds in the directory. Over the last several months the growth area has been in fund of funds where we have seen an 11% growth in the number of fund of funds focused on energy. This reflects the growing maturity of the sector and the existence of a growing number of energy funds with a long enough track record for inclusion in an energy-focused fund of funds.

Equity long/short strategies remain the most popular closely followed by commodity trading. Hybrid macro funds are the third largest category and these are funds that essentially comprise both equity long/short and commodity trading in the same portfolio. There continues to be growth in the total numbers of equity long/short and commodity trading strategy funds.

You have to hand it to President Chavez of Venezuela. He makes a statement in which he says he will cut off oil supplies from Venezuela to the US which everyone knows he can't and won't do - at least not without hurting himself deeply. But he knows that the markets will react to his idle threats and manages to force up the price of oil thus helping him, his country and dealing more damage to the struggling US economy.

Good shot Mr. Chavez - you plainly understand capitalism even if you don't subscribe to it.

Energy and commodity markets remain extremely volatile. While its fashion to blame 'speculators' for the volatility and upward movement in prices the reality is that energy markets have changed and matured. Today, the new factor in energy markets is market sentiment.

Market sentiment is something that traders in equity markets know all about but its been a growing feature of energy markets this last two years or so.

Market sentiment is that difficult to analyze, difficult to explain feature of markets. It could be a rumor or an actual event that might or might not actually have an impact on fundamentals but the market decided to respond to it. A recent example is the announcement by Chavez of Venezuela that he might cut off oil to the US. The reality of him doing such a thing is unlikely but the threat in of itself moved prices due to market sentiment.

The question to ask is how is market sentiment factored in to your risk assessments?

Actually, the title of this article is somewhat inaccurate since market sentiment has been an increasing risk factor in energy commodity markets for some time now. It’s been labeled as ‘speculation’ in the media but in reality it’s properly market sentiment. Market sentiment is plainly something that anyone dealing in equity markets is aware of and completely used to. In fact, people are paid nice salaries as analysts to tell us why equity markets moved and provide the underlying reasons to us – often those reasons are down to simply ‘market sentiment’.