Best of the Week
Most Popular
1. Five Charts That Show We Are on the Brink of an Unthinkable Financial Crisis- John_Mauldin
2.Bitcoin Parabolic Mania - Zeal_LLC
3.Bitcoin Doesn’t Exist – 2 - Raul_I_Meijer
4.Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - Nadeem_Walayat
5.Labour Sheffield City Council Election Panic Could Prompt Suspension of Tree Felling's Private Security - N_Walayat
6.War on Gold Intensifies: It Betrays the Elitists’ Panic and Augurs Their Coming Defeat Part2 - Stewart_Dougherty
7.How High Will Gold Go? - Harry_Dent
8.Bitcoin Doesn’t Exist – Forks and Mad Max - Raul_I_Meijer
9.UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - GoldCore
10.New EU Rules For Cross-Border Cash, Gold Bullion Movements - GoldCore
Last 7 days
Worse than Watergate - Release the Memo - Investigate Uranium One - 23rd Jan 18
CAT Stock Bouncing after JPM Upgrade How High and How Long Can This CAT Jump? - 23rd Jan 18
Why Banks Will Be Slammed In The Next Crisis—And That May Be Good News - 23rd Jan 18
Medicare Premiums Are A Shared Pool - Coming Changes That Will Transform Retirement - 23rd Jan 18
Charged Atmosphere of Heavy Police and Security Presence at Sheffield Street Tree Felling Protests - 23rd Jan 18
Pension Crisis And Deficit of £2.6 Billion At Carillion To Impact UK - 22nd Jan 18
Two Factors for Gold That You Don’t Want to Miss - 22nd Jan 18
Why You Must Own Silver in 2018 - 22nd Jan 18
This Could Be The Hottest Mining Stock Of 2018 - 22nd Jan 18
Stock Index Trend Trade Setups for the SP500 & NASDAQ - 22nd Jan 18
Stock Market Deceleration / Distribution - 22nd Jan 18
US Markets vs Govt Shutdown: Stock Markets at all time highs - 22nd Jan 18
Land Rover Discovery Sport - 1 Month Driving Test Review - 22nd Jan 18
Why should you use high-quality YouTube to mp3 converter? - 22nd Jan 18
Silver As Strategic Metal: Why Its Price Will Soar - 21st Jan 18
Stocks, Gold and Interest Rates Three Amigos Ride On - 21st Jan 18
Why Sometimes, "Beating the S&P 500" Isn't Good Enough - 21st Jan 18
Bunnies and Geckos of Sheffield Street Tree Fellings Protests Explained - 21st Jan 18
Jim Rickards: Next Financial Panic Will Be the Biggest of All, with Only One Place to Turn… - 20th Jan 18
Macro Trend Changes for Gold in 2018 and Beyond - Empire Club of Canada - 20th Jan 18
Top 5 Trader Information Sources for Timely, Successful Investing - 20th Jan 18
Bond Market Bear Creating Gold Bull Market - 19th Jan 18
Gold Stocks GDX $25 Breakout on Earnings - 19th Jan 18
SPX is Higher But No Breakout - 19th Jan 18
Game Changer for Bitcoin - 19th Jan 18
Upside Risk for Gold in 2018 - 19th Jan 18
Money Minute - A 60-second snapshot of the UK Economy - 19th Jan 18
Discovery Sport Real MPG Fuel Economy Vs Land Rover 53.3 MPG Sales Pitch - 19th Jan 18
For Americans Buying Gold and Silver: Still a Big U.S. Pricing Advantage - 19th Jan 18
5 Maps And Charts That Predict Geopolitical Trends In 2018 - 19th Jan 18
North Korean Quagmire: Part 2. Bombing, Nuclear Threats, and Resolution - 19th Jan 18
Complete Guide On Forex Trading Market - 19th Jan 18
Bitcoin Crash Sees Flight To Physical Gold Coins and Bars - 18th Jan 18
The Interest Rates Are What Matter In This Market - 18th Jan 18
Crude Oil Sweat, Blood and Tears - 18th Jan 18
Land Rover Discovery Sport - Week 3 HSE Black Test Review - 18th Jan 18
The North Korea Quagmire: Part 1, A Contest of Colonialism and Communism - 18th Jan 18
Understand Currency Trade and Make Plenty of Money - 18th Jan 18
Bitcoin Price Crash Below $10,000. What's Next? We have answers… - 18th Jan 18
How to Trade Gold During Second Half of January, Daily Cycle Prediction - 18th Jan 18
More U.S. States Are Knocking Down Gold & Silver Barriers - 18th Jan 18
5 Economic Predictions for 2018 - 18th Jan 18
Land Rover Discovery Sport - What You Need to Know Before Buying - Owning Week 2 - 17th Jan 18
Bitcoin and Stock Prices, Both Symptoms of Speculative Extremes! - 17th Jan 18
So That’s What Stock Market Volatility Looks Like - 17th Jan 18
Tips On Choosing the Right Forex Dealer - 17th Jan 18
Crude Oil is Starting 2018 Strong but there's Undeniable Risk to the Downside - 16th Jan 18
SPX, NDX, INDU and RUT Stock Indices all at Resistance Levels - 16th Jan 18
Silver Prices To Surge – JP Morgan Has Acquired A “Massive Quantity of Physical Silver” - 16th Jan 18
Carillion Bankruptcy and the PFI Sector Spiraling Costs Crisis, Amey, G4S, Balfour Beatty, Serco.... - 16th Jan 18
Artificial Intelligence - Extermination of Humanity - 16th Jan 18
Carillion Goes Bust, as Government Refuses to Bailout PFI Contractors Debt and Pensions Liabilities - 15th Jan 18
What Really Happens in Iran?  - 15th Jan 18
Stock Market Near an Intermediate Top? - 15th Jan 18
The Key Economic Indicator You Should Watch in 2018 - 15th Jan 18
London Property Market Crash Looms As Prices Drop To 2 1/2 Year Low - 15th Jan 18
Some Fascinating Stock Market Fibonacci Relationships... - 15th Jan 18

Market Oracle FREE Newsletter

6 Critical Money Making Rules

Three Energy Charts That Should Scare the Bejeezus Out of You

Commodities / Crude Oil Jan 09, 2011 - 10:44 AM GMT

By: Sean_Brodrick


Best Financial Markets Analysis ArticleAfter surging into the end of the year, oil and oil stocks have pulled back. Why?

• It’s certainly not global economic fundamentals, which are improving, with car sales rising and unemployment dropping.

• It’s not oil inventories — U.S. oil stockpiles dropped 20 million barrels in a recent one-month period.

• It’s not expectations of global oil demand — which keep getting yanked higher for 2011.

The reason crude crumbled earlier this week was simple profit taking. We could see some more profit taking in the short-term. But all the things I’m watching tell me we could be headed for much higher crude oil prices — at least $105 a barrel in the first half of 2011, and potentially $130 or higher later in the year.

That means this pullback is a golden opportunity in sweet, black crude.

Why do I think crude oil is headed higher? Let me show you three charts. As a consumer, they scare the heck out of me. As an investor, they tell me there’s money to be made in the oil market.

Chart #1: Mexico’s Oil Production Is Lower … Lower …

Mexico's Oil Exports Slump Lower Every Year

Mexico’s crude oil exports dropped again in 2010, continuing a 4-year, 27% drop in that country’s oil exports, which peaked in 2006. Leading the charge lower is a cliff-steep drop in production in Mexico’s super-giant oil field, Cantarell.

This is bad news for the United States because Mexico is our #2 supplier of imported oil.

The U.S. Energy Information Administration (EIA) expects that Mexico’s oil production will drop again in 2011. At the current rate of decline, the EIA expects Mexico will become an oil importer in 2015. But other independent experts say Mexico’s oil crash is coming a lot sooner — by 2014, or maybe even 2013.

Since the oil market discounts the future, oil traders will start pushing up oil prices far in advance of Mexican exports hitting bottom.

Chart #2: Drilling Is Drying Up in the U.S. Gulf of Mexico

The Obama administration lifted its offshore drilling ban months ago, and the U.S. government is making a lot of noise over the fact that the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) is going to expedite drilling approvals for 13 companies.

But the damage has been done. Many shelved projects won’t come online for a long time. Experts say the wait could continue until the second half of this year, and maybe into 2012.

It’s not only deepwater drilling that is impacted. Even shallow-water drilling rigs are cooling their heels. The combined effect brings us to the next chart:

U.S. GoM Rig Count

On the far right of the chart, you can see that drill rig counts were dropping anyway. They started to climb last year, only to swoon after BP’s Deepwater Horizon explosion in the Gulf of Mexico.

It’s a trend that continues. In the last week of December, the U.S. offshore rig count dropped 4% from the previous week — but it was down a whopping 42.86% year over year. In the latest example, contract driller Noble Corp. said Monday that Marathon Oil Co. is cancelling a four-year, $752 million contract to lease an ultra-deep-water rig in the Gulf of Mexico.

If rigs aren’t drilling, those offshore fields won’t be producing. The EIA says that U.S. oil production from the Gulf of Mexico should drop by 170,000 barrels a day in 2011.

To be sure, the BP Deepwater horizon oil spill was one of the greatest environmental disasters this country has ever faced, spewing 4.9 million barrels of oil into the Gulf of Mexico. Personally, I’d be happy to see BP executives thrown in prison. But we are sacrificing our future energy security if we don’t tap the oil in the Gulf, and naturally, less supply means higher prices.

Speaking of higher prices …

Chart #3: U.S. Gasoline Prices Head for $4 a Gallon (Again)

In this next chart from, the two-year trend in U.S. gasoline prices becomes painfully clear:

Are gas prices headed back to old highs?

This is an ugly trend that affects nearly all Americans. I think we’re headed back to $4 a gallon gasoline, and maybe higher than that. For a nation designed around the automobile, that is downright dangerous.

But there’s one nation that is catching up to us in our car-crazy gasoline use. That country is China, which now buys more new cars per year than the United States.

China’ year-on-year oil demand rose 6.7% in the first 11 months of 2010, including a 12% rise in October and 15% in November. We don’t have the data on December yet, but as you can see, not only is China using more oil, its demand is accelerating!

And the Chinese don’t have to worry about the chart above because gasoline prices are strictly regulated by the Chinese government.

Do I mean the Chinese government will subsidize gasoline prices to keep its citizens happy? Yes, that’s exactly what I mean. And China has the cash do it — after all, we send them more and more of our money every day.

It’s Time to Take Action!

Oil and gasoline prices are being squeezed higher by a combination of tight supplies and increasing demand. The trend is clear. What’s not clear to many is what to do about it.

You can buy a bicycle (I recommend that — everyone could use the exercise). You can curl up in the fetal position (I don’t recommend that). Or you can take charge of your investing destiny and buy a basket of the best stocks and funds to ride the coming surge in oil prices.

Not all energy stocks are created equal. There will be some real winners in the coming energy crisis — as well as some stocks I wouldn’t want to touch.

You can do your own research, which is always a good thing. Or you can hop on the profit train as I put together MY best picks in a new energy report, Burning Oil: 7 Winners in the Next Energy Boom.

The report is packed with analysis, insight, and my picks of the best oil picks to power up your portfolio. What’s more, I’m including three follow-ups with a subscription to the initial report.

The report comes out one week from now. If you buy it now, you can get it at a HUGE discount.

For details on what’s coming in my report, Burning Oil: 7 Winners in the Next Energy Boom, point your web browser here. And whatever you do, I don’t recommend you ignore the coming energy shock. It’s best to prepare your portfolio and your life for the higher prices ahead.

Yours for trading profits,


P.S. This is an incredible opportunity — don’t waste it. The next oil shock is coming whether you like it or not. You can invest wisely and cushion yourself against rising prices … or you’ll wish you had. Don’t wait! Get onboard today.

This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit

© 2005-2018 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules