Global economies are recovering, however, not at the fast rate commodity markets are indicating. What gives? Oil has become the inverse proxy to the U.S. dollar: as the dollar weakens, the price of oil moves higher. (Is oil in danger of becoming an investment bubble?) With the burgeoning debt piling up in the United States, the dollar looks to be under pressure to move lower for the foreseeable future, explains Steven Halpern for Blogging Stocks.

The futures market is supporting a trend that oil and gas stocks will move higher  in the months ahead, especially since many expect the dollar to remain depressed. (What else is supporting oil’s upward price moves?)

Halpern explains that if energy commodities are moving higher in the current economy, then there’s little on the horizon that would do anything but put more upward pricing pressure on the industry.

Meanwhile, gas prices are inflating as oil surges, too. In the latter part of October, gas gained 14 cents a gallon. Prices now stand at a national average of $2.70. Analysts are attributing the jump to an increase in oil prices.

Will oil and gas continue to remain strong? There are ETFs to represent both sides, but be sure to understand how these ETFs work by reading our special report on leveraged and inverse ETFs. Leveraged and inverse ETFs aren’t meant for long-term use and they’re not suitable for every investor.

For more stories about oil and gas, visit our commodity category.

• Ultra Oil & Gas ProShares (NYSEArca: DIG): up 2.9% over one month

• UltraShort Oil & Gas ProShares (NYSEArca: DUG): up 6.3% over one month

New home sales had an unexpected 3.6% drop in September. Waning effects from the government’s tax credit for first-time homebuyers are being blamed for the decline, reports Alan Zibel for the Associated Press. September’s decline was the first since March. SDPR S&P Homebuilders (NYSEArca: XHB) is down more than 3% this morning. For more stories on real estate, visit our real estate category.

The Treasury Department and the GMAC, the former lending arm of General Motors, are in talks for a third round of taxpayer-funded aid. The Treasury mandated that GMAC raise another $11.5 billion after stress tests, but the lender has had to go back to the government for more cash, Reuters reports.

ConocoPhillip’s (NYSE: COP) announced its third-quarter earnings fell 71% from a year ago. The company blames lower gas and oil prices along with poor refining margins, reports Isabel Ordonez for Dow Jones Newswires. Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) are expected to report lower earnings tomorrow and Friday, respectively. Vanguard Energy (NYSEArca: VDE) is down more than 2% this morning; ConocoPhillips is 6.6%; Chevron is 13.1%; and Exxon is 19.5%.

Durable goods orders in September climbed, which is being hailed as a favorable sign for U.S. manufacturing. The 1% jump is the fourth increase in six months, reports Greg Robb for MarketWatch.

For more stories on oil, visit our oil category.

For the third consecutive month, home prices rose in August. The Standard & Poor’s/Case-Shiller index showed the prices rose 1% from July in 20 major cities. Prices are still down 11.4% from a year ago, reports J.W. Elphinstone for the Associated Press.

Consumer confidence fell in October to 47.7, the second-lowest reading since May. Analysts had expected a reading of 53.1. Any reading above 90 indicates the economy is on solid footing; a reading above 100 indicates solid growth, reports Ashley M. Heher for the Associated Press. Fewer jobs, lower salaries and a gloomy business climate are bringing shoppers down and keeping them reluctant to spend. Retail Select Sector SPDR (NYSEArca: XRT) is down nearly 2% this morning. (A holiday ETF?)

BP (NYSE: BP) reported a bigger-than-expected profit in the third quarter, even though lower oil and gas prices put a dent in its earnings. BP met its target by cutting costs by $3 billion. WisdomTree International Energy (NYSEArca: DKA) is up 1.5% this morning; BP is 8.6%.

United States Steel (NYSE: X) posted its third consecutive quarterly loss, thanks to the global economic downturn, which has depressed steel demand. The company did note that production and shipments rose from the second quarter and that a narrower loss in the fourth quarter is expected. Market Vectors Steel (NYSEArca: SLX) is down nearly 2.5% this morning; United States Steel is 5.1%. (Where steel and copper are going).

Labor Day can be considered a week late this year – the holiday falls on Sept. 7. Last year, Labor Day fell on Sept. 1, which was before the start of the school year for many students.

According to a survey, AAA said it is projecting that 39.1 million travelers will take a trip of 50 miles or more from home this Labor Day, a 13.3% decrease from Labor Day 2008. Many Americans are simply staying put this Labor Day and choosing to stay near home, says Chris Reidy for The Boston Globe.

While higher gas prices might have given rise to the “staycation,” they’ve been benefiting funds like United States Gasoline (UGA), which is up 70.1% year-to-date.

As the markets are beginning to show strength and signs of health are beginning to appear in the economy, this could be an opportunity to reevaluate your strategy before summer ends and the markets re-open. In fact, our latest ETF book which has just been released and is finally available online, making a perfect Labor Day read!

Have a fun weekend!

Remember, though, that while forecasts are informative, unforeseen events could cause the reality to play out differently. While you keep these predictions in mind, have an entry and exit strategy if you’re thinking of investing in energy ETFs.

• U.S. Crude Oil. Crude oil prices are going to remain volatile, while the WTI spot price is projected to rise slowly as economic conditions improve, to an average of about $72 per barrel in 2010. Expect crude prices to hover around $70 per barrel for the fourth quarter. United States Oil (USO) is up 15.7% year-to-date

• Gasoline. The average price for regular-grade gasoline, which reached a summer peak of $2.69 per gallon in EIA’s June 22 weekly survey, fell by more than 20 cents per gallon in  the four weeks following the drop in crude oil prices. Now, however, they’re bouncing back. EIA expects the annual average regular-grade gasoline retail price in 2009 to be $2.34 per gallon.  Higher projected crude oil prices next year are expected to increase the average price to $2.66 per gallon in 2010. United States Gasoline (UGA) is up 82.2% year-to-date

• Natural Gas. Natural gas inventories are expected to set a new record high at the end of this year’s injection season (Oct. 31). Natural gas production is projected to remain flat this year, then fall by 2.8% in 2010. United States Natural Gas (UNG) is down 49.6% year-to-date

• Coal. Coal consumption in the electric power sector has declined 6.4%, but it’s expected to climb 1.3% in 2010. Coal production is projected to drop off by 8% this year, thanks to lower consumption, fewer exports and higher inventories. That trend is predicted to continue into 2010. Market Vectors Coal (KOL) is up 94.4% year-to-date

• Electricity Total retail sales of electricity are projected to decline by 2.7% throughout the United States during 2009.  Sales in the industrial sector are projected to decrease by about 10% this year because of the weak economy. For 2010, a 0.8% rise is expected. iShares Dow Jones U.S. Utility Index (IDU) up 5.7% year-to-date

For more stories about commodities, visit our commodity category.

There have been a number of stellar performers in recent weeks – these are just a few that caught our notice. Bear in mind that wherever you choose to place your money, always have a strategy for both entry and exit, since no trend lasts forever.

Turkey has several factors in its favor: the central bank has reduced rates to its lo a record low, consumer confidence is on the rise and jobless claims are declining. The country’s stocks have recently recovered to pre-crisis levels and it is reflected in the country’s ETFs.

• iShares MSCI Turkey Invest Mkt Index (TUR): up 76% year-to-date; up 19.5% in the last two weeks

Oil is what makes the world go ’round, and the price of oil may continue to rise as economies recover. Once the global economy sees normalcy, some feel that it’s likely that oil will see higher demand and a lower supply, which would naturally result in the higher price of oil and gas at the pumps.

• United States Gasoline (UGA): up 82.1% year-to-date; up 14.5% in the last  two weeks

Coal has a couple of good things going for the sector: reduction in capital expenditure by producers, a weaker U.S. dollar, as well as increases in both steel and electricity consumption. Lobbyists are also fighting on Capitol Hill for more perks for the industry.

• Market Vectors Coal ETF (KOL): up 93% year-to-date; up 14.9% in the last two weeks

In retail, some high-end consumers are increasing their intake of goods. Many countries are reporting rises in exports and trade surplus, and some luxury retailers are quietly discounting items to drum up more business. So far, the tactic seems to be working.

• Claymore/Robb Report Global Luxury (ROB): up 32.4% year-to-date; up 11.9% in the last two weeks

The ETF that tracks regional banks is producing impressive results considering that many believe regional banks are closing or in trouble because of commercial REITs. MarketWatch says strong profits and good reports from large banks has helped buoy the financial sector and regional banks may be along for the ride.

• SPDR KBW Regional Banking (KRE): down 25.2% year-to-date; up 23.7% in the last two weeks

Max Chen contributed to this article.

There are reports floating around that the CFTC is preparing to blame speculators for the run-up in energy prices. However, Reuters reports that the CFTC head dismissed the rumors as both “premature” and “inaccurate.” The CFTC is in the midst of three hearings, the first of which took place today.

Britain’s financial regulator today has found no evidence that speculators are behind wild swings in oil prices, report Alistair MacDonald and Carolyn Cui for The Wall Street Journal. Instead, the regulator may attribute it to economic uncertainty.

Some believe that the production of oil, natural gas and coal are going to peak and go into a decline within the next decade. There is nothing that technology can do to save the resources themselves, and production will just continue to wane as we stop using the commodities.

Chris Nelder for Forbes says that “peak oil” is not about running out of oil, it is about reaching the peak rate of production, as we tap out of the resource. As of now, there are no cheaper substitutes snd oil production is expected to go into terminal decline by around 2012. The major oil fields are being depleted, and new discoveries are smaller and of less quality.

Where does that leave us?

Thanks to innovation, the next generation of alternative fuels is in the works. Mark Mills for Forbes says that oil demand will continue to rise as economies recover, but the supply picture isn’t going to change, meaning that we should fasten our seat belts for more potential price volatility.

Mills says anything with a hint of carbon or hydrogen can be reasonably engineered into oil equivalent fuels. As new methods appear, Mills says, it could free up the oil supply where other non-liquid alternative fuels do the trick. His book, The Bottomless Well, deals with the idea of the tech world taking over energy in the pursuit of maintaining our lives as we know them.

• iShares Dow Jones U.S. Oil & Gas ETF (IEO): up 18.2% year-to-date

• United States Gasoline (UGA): up 68.6% year-to-date

• United States Oil (USO): up 9.7% year-to-date

For more stories about oil, visit our oil category.

Federal regulators have announced that they’re considering trading restrictions on hedge funds and other “speculative” traders in markets for oil, natural gas and other energy forms, reports Edmund L. Andrews for The New York Times.

The Commodity Futures Trading Commission (CFTC) announced several things this morning:

• It will consider new limits on the volume of energy futures contracts that financial investors will be allowed to hold
• It will also publish more detailed information about the aggregate activity of hedge funds and traders who arbitrage between domestic and foreign energy prices
• Several hearings will be held this month and next; the first will examine whether to impose federal “speculative limits” on energy futures contracts

More and more critics are blaming speculators for the wild swings in oil: last July, it nearly reached $150 a barrel, then plunged to $33 before rising to about $70 in recent weeks. Even as oil prices climbed this year, there were questions as to why because demand is still weak and inventories are rising.

Speculators are defined by federal officials as those who are “non-commercial” – essentially financial investors who aren’t users or producers of those commodities, and are primarily interested in betting on the direction of prices.

Not everyone agrees that speculators need to have a lower profile, though. In a Bloomberg report, Emanual Balarie, managing director for Balarie Capital Management in Chicago, says if speculators leave the markets, it becomes less liquid and there’s weaker price discovery.

Others are skeptical that futures contracts impact supply and demand at all.

Futures-based commodity ETFs are already limited in the number of shares they can sell. If they run out, they have to apply for more with the SEC.

What the future holds and what the CFTC concludes remains to be seen. 24-7 Wall Street suggests that some funds may either be forced to close or adjust their scope to be more like a closed-end structure. We won’t really be sure what will happen until after the hearings conclude, though.

The CFTC’s hearings will include input from consumers, businesses and market participants to determine the best course of action.

Oil and gas prices have been all over the map these days. After reached record highs in 2008, energy prices collapsed, then rose again, but are now sinking under the weight of weaker demand. John Spence for MarketWatch points out that Moody’s says an economic recovery in 2010 is expected to be slow and painful, and crimp demand for energy commodities.

United States Gasoline Fund (UGA) is the only ETF tied to gas prices. There are some things investors should know about it:

• Its 0.60% management fee doesn’t include trading expenses
• It doesn’t track the spot price of oil; it follows the futures price of unleaded gas
• It typically invests in the near-month contract
• Its structure can result in some tax issues, so consult your accountant and be aware of what your implications might be

Take heart – even though gas prices have crept up, they’re nowhere near last summer’s highs of more than $4 a gallon. But if you drive a considerable amount and you’re concerned about rising gas prices, UGA can be a way to hedge. One way is to figure out what you spend per year on gas, then buy a corresponding amount in shares.

When it comes to commodity ETFs, it’s always wise to have a strategy. Use specific signals to determine when you enter a position and when you leave it to protect yourself against volatility. Our trend following report can help you craft a strategy.

For more stories on oil and gas exchange traded funds, visit our oil and gas ETF categories.

• How to Deal with Commodity ETF Volatility
• Oil and Gas ETFs – Now What?
• Not All Commodity ETFs Are Created Equal
• Natural Gas ETFs: Time to Get Excited?
• Are Oil and Gas ETFs At the Top?