Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Crude Oil Crisis and How to Profit From the Coming Oil Boom!

Commodities / Crude Oil Jan 11, 2008 - 06:42 AM GMT

By: Money_and_Markets

Commodities

Best Financial Markets Analysis ArticleSean Brodrick writes: Recently, I told you that I expected oil prices could spike to $150 per barrel in 2008. But, if anything, that target might be too low! In fact, the head of the International Energy Agency just said that demand growth just from China and India alone could cause prices to rise to $150 per barrel.

So imagine what other factors such as geopolitical disruptions would do to prices! Indeed, the fastest-growing bet in the oil market these days is that the price of crude will double to $200 a barrel by the end of this year.


You can see why I've been combing through obscure industry journals, poring over government energy statistics, and scrutinizing supply and demand data to find the best ways to profit from oil's next major move.

What I came up with are five smoking-hot stocks and two red-hot funds that will blast off from the coming surge in oil prices. More on them in a moment.

First, I want to tell you ...

Oil is not only climbing fast, it's accelerating.  Any short-term pullback is a gift to savvy investors.

Why We Are Careening Toward The Next Major Energy Crisis

America is the world's largest consumer of oil, guzzling more than 7.5 billion barrels per year. We import more than half the oil we use, and that amount is rising, which is why America is described as being "addicted to oil."

But that's not all ...

  • More than 81% of the world's discovered and usable oil reserves come from just 10 countries. Most of them don't like us much. And 30% of the world's oil is in three countries — Iraq, Kuwait and Saudi Arabia. Saudi Arabia, home to 15 of the 19 9/11 hijackers and a major source of funds for Islamic terrorists, is the world's "Central Bank of Oil."
  • The world consumes 173 billion barrels of oil — about 14 Prudhoe Bays — every 2.4 years. At the same time, we find enough new oil to supply just 3% of that.
  • 2008 is when the world will start using oil at a rate of more than 1,000 barrels PER SECOND! According to the International Energy Agency, global oil demand will average 87.8 million barrels per day (bpd) in 2008, which equals 1,016 barrels per second — a sonic boom of energy use.

Just to keep prices stable, in the next decade, we're going to have to find a couple more fields the size of Ghawar — the biggest oil field in Saudi Arabia ... and the world.

The U.S. is running scared!

Since August, the Bush administration has been adding 50,000 barrels a day to the Strategic Petroleum Reserve — the nation's emergency oil stockpile — with plans to kick up the pace to 70,000 barrels a day by the end of January.

The federal government has been soaking up as much as 0.3 percent of the world's supply of light sweet crude at a time when crude is close to $100 per barrel. And all their buying has added as much as 10% to the price of crude, an oil consultant told a Senate panel recently.

My question — what does the Bush administration know that would make them so eager to add to the Strategic Petroleum Reserve when prices are so high? What are they really afraid of?

Maybe the White House is afraid of the fact that U.S. crude stocks have declined by 64 million barrels in the last six months ...

Maybe they're scared because domestic oil supplies are now well below the five-year average of 300 million barrels for this time of year ...

Maybe they realize that the current size of the Strategic Petroleum Reserve is only big enough to keep the U.S. running for 56 days if imports were suddenly cut off ...

Or maybe they're just plain scared of $200-a-barrel oil!

More Panic Ahead at America's Gas Pumps

Imagine what $5-a-gallon gas would do to U.S. consumers!
Imagine what $5-a-gallon gas would do to U.S. consumers!

Low crude oil supplies have already driven gas prices past $3 per gallon, but unfortunately, it can get worse.

U.S. consumers are now spending 3.5% of their household budgets on gasoline and fuel costs. But during the Oil Crisis of 1981, that number was more like 3.8%.

In other words, once inflation is factored into the equation, oil prices would have to rise to $140 per barrel to reach the equivalent levels of 1981!

If you believe there is pain at the pump now, how do you think $5 or $6 per gallon gas will go over with the American public?

Of course, the oil crisis isn't just a U.S. issue ...

Plenty of Fast-Growing Countries Are Lining Up for More and More Oil

According to the World Bank, 104 countries expanded by more than 5% in 2006 and most of them kept up that pace in 2007. Businesses and consumers in Asia, South America and Africa are buying more and more cars — 14,000 a day in China alone.

OPEC reports that in 2007, world demand for crude oil rose by 1.2 million barrels per day. They project that in 2008, world oil demand for crude will rise by 1.3 million barrels per day. And by 2030, this thirst is expected to increase about 35%.

Of the world's growing oil consumers, China deserves mention all on its own. China's demand for oil rose from 5.6 million barrels per day in 2003 to 7.6 million in 2007, and will increase another 5.7% this year, the IEA said.

Meanwhile, half of the world's oil production comes from less than 120 giant fields, each producing more than 100,000 barrels per day.

The majority of the largest producers are over 50 years old ... the average size of new discoveries is declining ... and we're getting less production out of existing oilfields every year.

Just look at what's happening in Mexico! The country's state-owned oil company, PEMEX, is the third-largest provider of imported oil to the U.S. And it is facing catastrophic declines.

Production in November fell 8.2% from the same period a year earlier. At the root of this is a three-year, 40% decline at Cantarell, Mexico's largest oil field and the third-largest oil field in the world.

Even worse, Pemex's daily oil production may drop by a third — to 2.1 million barrels — in just nine years.

Yes, there is more oil to be found in the world. But the cheap oil is fast disappearing. Every new barrel we find will likely be more expensive, and that's why $150 may only be a signpost on the way to $200 a barrel!

Make No Mistake, OPEC Wants Triple-Digit Oil Prices!

The Persian Gulf princes are all in favor of triple-digit oil. Chakib Khelil, the current president of the Organization of Petroleum Exporting Countries, recently told reporters that $100-per-barrrel oil is "not necessarily very high." He added, "There is enough oil in the market."

So when OPEC meets next month to discuss production quotas, don't hold your breath for an increase in production. The fact is that with oil at these price levels, OPEC members are pumping near flat-out to rake in the bucks.

They need that money — the economies of many big oil-exporting countries are growing so fast that their domestic need for energy is drying up their exports.

Oil Consumption in Oil-Producing Countries

Lehman Brothers analysts say that this year, OPEC countries will increase their use of oil by 4%. And if that sharp growth continues, it means several of the world's most important suppliers may need to start importing oil within a decade.

According to a report from CIBC World Markets, crude exports could drop by as much as 2.5 million barrels a day by the end of the decade. That is about 3% of global oil demand — and MORE than the current spare capacity in the oil markets.

As you can see, everything is pointing to much higher oil prices. And while that's bad news for consumers, it can lead to great profits for savvy investors ...

How You Can Profit From The Coming Oil Boom

If you want a simple way to play the oil sector, you can always buy the Energy Select SPDR (XLE). This exchange-traded fund holds big-name companies like ExxonMobil, Chevron, and Valero.

However, for the really big potential returns in energy, I've picked out five stocks that are leveraged to the price of oil and two sizzling funds that are positioned in the catbird seat of the oil industry.

I'll be naming these companies in a special energy report I'm sending to my subscribers on Thursday, January 17.

I'll also be selling this report — including three follow-ups — for $199. I think it would be cheap at triple the price, but if you contact us at 1-800-291-8545, and mention my name, you can reserve a copy for the low pre-publication price of $99. You can also secure your copy online by clicking here . Then, on January 17, we'll email you a PDF copy so you can jump on my red-hot recommendations as soon as they come off the press.

The best part is that we're seeing a short-term pullback in oil prices right now, which will give you an excellent buying opportunity.

Wall Street didn't see $100-a-barrel oil coming, and it's not prepared for $150 or $200 oil, either. But you can be prepared — to protect your portfolio and potentially reap a whirlwind of gains.

Good luck and good trades,

Sean

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2019 http://www.MarketOracle.co.uk - 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