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Allis-Chalmers Energy (ALY) formally announced their Q4 and full year earnings. Things were pretty much as they said they would be back on January 31 when they presented their preliminary unaudited results for 2007. Here are the final numbers: For the fourth quarter of 2007, the company earned $5.8 million, or 16 cents a share, compared with $10.4 million, or 40 cents a share, a year earlier. Revenue in the quarter rose 25 percent to $143.8 million compared to $114,898 million a year earlier. On an annual basis, the company earned $50.4 million versus $35.6 million in 2006 Revenue in 2007 came in at $571 million compared to 2006's $311 million. Management's message on Q4 is as follows: "as we reported in our January 31, 2008 press release, our results in the fourth quarter were affected primarily by weakness in demand for drill pipe in the Gulf of Mexico due to the hurricane season and the departure of rigs to the international market, start up costs and low utilization of...

In tinkering with my Alert HQ software, I came across Allis-Chalmers Energy (ALY). The stock has been on a straight path downward since last July but is now starting to rally. It exhibits the characteristics that make the software identify the company as a BUY. Background -- The following is from the company's web site: "Allis-Chalmers Energy Inc., is a Houston based multi-faceted oilfield services company. We provide services and equipment to oil and natural gas exploration and production companies, domestically in Texas, Louisiana, New Mexico, Colorado, Oklahoma, Mississippi, Utah, Wyoming, Arkansas, Alabama, West Virginia, offshore in the Gulf of Mexico, and internationally primarily in Argentina and Mexico. The Company operates in six sectors of the oil and natural gas service industry: rental tools; international drilling; directional drilling services; casing and tubing services; compressed air drilling services; international drilling; and production services. Providing...

Oil hit $100 a barrel on Tuesday. My response was to sell my position in the PowerShares DB Oil Fund (DBO). This ETF has been in a trading range since November 2007. It has recently been threatening to fall out of this range with many speculators worried about declining demand due to high prices and a weakening U.S. economy. These worries seem to have been manifesting themselves in a string of weekly petroleum inventory reports showing a build in supplies rather than a drawdown. During the last week or so the ETF seemed to take off as crude prices suddenly began to rise. As it looked like crude was going to hit $100 again I tightened my stop. On Tuesday, we did see $100 and as the price of DBO backed off a bit at the end of the day, the stop was hit. Having sold DBO at $36.30, I am comfortable that I pulled the trigger at an appropriate time. As the ETF finally moved a bit above the top of its trading range, the technical response was an expectation that we would now see a big move up....

Oil fell today on concerns that demand for crude would drop if the economy slows down. And certainly there are fears that, with recession a distinct possibility, that scenario may be playing out right now. Lower demand should yield lower prices - this is known as elasticity, if I remember my economics classes correctly. With the current oil sector fundamentals as the backdrop, will prices actually fall very much? What have we seen during previous economic slowdowns? I thought I would investigate by plotting oil imports against the performance of the SPDR S&P 500 ETF (SPY). I will assume that SPY more or less mirrors the performance of the economy. I look at oil imports as a direct proxy for oil demand. The oil numbers exclude what goes into the Strategic Petroleum Reserve. This should shed some light on how demand for oil changes as the economy rises and falls. As can be seen in the chart above, oil imports (the dark blue line) vacillated in a range between 8.5 and 10 million barre...

Having recently invested in the PowerShares DB Oil Index ETF( DBO ), the following statement caught my interest today: "New work published by Gary B. Gorton of Wharton, Fumio Hayashi of the University of Tokyo and K. Geert Rouwenhorst of Yale, shows how investors can win bigger profits with futures-trading strategies based on the amount of a given commodity that is held in storage. Returns -- or "risk premiums" -- are bigger when low inventories make prices more volatile, Gorton and his colleagues conclude." Clearly, the average investor would find it difficult to know with any accuracy what the inventory levels are for most commodities. Gorton and colleagues have determined that investors can infer inventory levels from futures- and spot-pricing data. Here is the background as Gorton and his associates describe it: "The new work looks at the key role played by inventories -- commodities stored for future sale. Inventories serve as buffers against fluctuations ...

Earlier this week I had this year's first load of heating oil delivered for my drafty, 100 year old house. The cost was a good 25% higher than last year. I was astounded. Based on emotion, I resolved to find my personal energy hedge against rising prices. A year or so ago, as a result of rising prices at the gas pump, I had bought shares of XLE , the Energy Select Sector SPDR ETF. I naturally turned to that idea again. On thinking about it, however, I recalled that a number of energy companies had seen earnings reduced lately due to a falloff in refining profits. Maybe I could do better than XLE. So I thought about the ETFs that track indexes of the actual commodities. The PowerShares DB Energy ( DBE ) tracks a mix of energy products including Light Sweet Crude Oil, Heating Oil, Brent Crude Oil, RBOB gasoline and Natural Gas. The alternative was PowerShares DB Oil ( DBO ) that tracks only Light Sweet Crude Oil. Performance of DBE was slightly better than the performance of DBO but...