After dropping from $147 last July close to $30 this past winter, crude oil is now trading within a reasonably tight track around $40 and $57.

Now it’s on the move again, breaking through $60 right at the beginning of the summer driving and hurricane seasons.

But oil companies’ proud profit margins of yesteryear have disappeared… along with the easy credit that allowed investment banks and hedge funds leverage crude prices to record highs.

Suddenly, not even the most pink politician is talking punitive taxation against oil companies any more. The euphemisms “surcharge” and “windfall profits” have gone with the wind. Share prices of Exxon (NYSE:XOM) and Royal Dutch Shell (NYSE:RDS.A) are down 30-40%… just like the rest of the market.

Our team of analyst has compiled a concise list of the five oil companies you should have in your portfolio. They represent a strategic selection… ranging from U.S. refiners benefiting from lower crude prices and tight inventories to tiny, undervalued oil producers working in regions that will represent a hotbed for demand from China and Russia.

Oil Stock #1: The Refiner

There are companies that have been benefiting nicely from oil’s reversal of fortune. Especially refiners, whose cost basis has been cut by 70% over last year’s peak, assisted by lower crude prices and a stronger dollar.

Take Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT). This U.S.-based refiner and maker of petro-based specialty products just reported Q1 net income of $75.6 million, compared to a net loss of $3.4 million in the first quarter of 2008.

Its adjusted EBITDA of $50.1 million for Q1′09 reflects an increase of $35.2 million over Q1′08.

Despite the substantial drop in gasoline demand (Calumet’s quarterly sales actually fell 30% from the year-ago period!), the increase in gross profits was primarily due to the drop in crude oil prices.

Adjusted EBITDA of $50.1 million for the first quarter of 2009.

The Indianapolis-based refiner and processor of specialty lubricants just declared a quarterly cash distribution of $0.45 per unit on all outstanding units.

But let’s reminisce: The steepest increase in crude prices last year occurred in the second quarter. While the biggest drop in gasoline consumption appears to be behind us—mostly in Q4′08 and the past, dreary first quarter of 2009. Even if oil prices keep increasing from current levels, the cheaper inventory purchased in the past 6 months, combined with increasing demand, should make for a gangbuster second quarter.

Gasoline inventories were reported to have dropped by a larger-than-expected 4.1 million barrels in the second week of May, bringing current inventories to the middle of the historical average.

The stock today is trading at just under $13. Buy up to US$14 in the coming days, with a 25% profit horizon by July… when gasoline demand will stretch inventories and send U.S. refiners soaring.

Oil Stock #2: The Acquisition Target

The best part of the oil and natural gas business is its predictability. The last several years should be all the proof you need.

Here’s how the story goes: A soaring economy increases demand, which causes prices to surge. Eventually, demand reaches its peak, the market is oversupplied and prices fall. It’s classic economics.

Right now, according to my models, we are just past the peak of the fall, which makes this a fantastic buying opportunity.

Over the past six months, the world’s natural gas and oil producers could not close their valves fast enough. Nearly every week, we heard rumors of OPEC quietly cutting more and more production. Remember, less supply equals higher prices.

Now that many economists believe the worst of the financial fiasco is over, demand will begin to rise. Current reserves, which are significantly above historic averages, will dwindle and producers will be forced to open their valves once again.

But there is only one thing that will persuade them to get the energy flowing once again… prices. Futures traders are going to have to push oil and natural gas prices even higher before financially cautious companies open the tap.

That way, when they do start pumping, they know their pipelines will be filled with profits.

Watching Apache (NYSE:APA) and its burgeoning balance sheet, we tried to find out what company might be the target of a possible acquisition bid.

There are multiple possibilities, ranging from speculative companies with a large access to oil sands to some of the nation’s largest natural gas producers.

With energy prices making it tough to boost the bottom line, Apache and its competitors are surely going to use their cash and stock reserves to go on an acquisition spree. While I have my opinions, telling you what company I believe Apache will target would be a speculative guess at best.

We can make the same sort of profits, without the unnecessary risk: Instead of targeting one company and risk missing the mark if another target suddenly appears, why not take a stake in a company that will benefit no matter who buys what?

That company is Anadarko Petroleum (NYSE:APC). With a Street value of about $23 billion, this company is not going to get acquired by anybody but the industries biggest players. If it were to happen, they would have to pay one hefty premium for a portfolio of global reserves.

It is an unlikely scenario.

What is likely is an up-tick in industry M&A activity that boosts the value of the entire sector, including Anadarko and its steady revenue stream.

By now, you have certainly heard of value-destroying flaws with mark-to-market accounting. As the value of a company’s assets drop, they must change their value on the balance sheet, whether the company intends to liquidate them or not. Anadarko just took a $240 million hit. It hurts now, but as energy prices slowly increase with a once-again expanding economy, the so-called flaws in mark-to-market accounting will look like a blessing.

At current prices, Anadarko is undervalued. If M&A activity kicks into high gear, it will look even more undervalued. And if energy prices continue their bullish surge, oh boy, shareholders will do quite well.

My recommendation is buy shares of Anadarko Petroleum (NYSE:APC) at or below $47. This is a mid-term play that could put 25% gains into your pocket within the next 6 months.

The energy industry just hit its earnings bottom, making this a great time to be a buyer, no matter if you are a shareholder or a major producer looking to acquire some extra growth.

Oil Stock #3: The Power Broker

Total S.A. (NYSE:TOT) acts as the big brother to the entire European energy-producing industry. This is a $130-billion, French-based conglomerate that has all the capital and power it needs to become a global dominator as Europe’s energy supply chain suddenly breaks.

TOT as was a $90 stock in June of 2008. It’s a $57 stock today. And it could be a $150 stock if crude prices continue to move and the EU is afraid of becoming too dependent on Russian energy imports.

Think of it Total as a football team’s back-up quarterback. With Russia in control of Europe’s natural gas supply, it is forced to sit on the sideline and watch the game unfold.

But as soon as Russia is checked, Total will run in and take the crowd by storm. It has everything it needs to be a continental dominator: The company has operations all across the globe, but is strategically positioning itself to take advantage of growth in Western Europe. It has operations in all of the key countries mentioned above.

But even better, it has a huge downstream business that will soar in value as Russia battles with the west. Just like it did this past winter!

Total has enormous amounts of refining capacity: Over 2.5 million barrels per day. In fact, it is the largest refiner in Western Europe. Even more important than Total’s industry-leading refining capacity is its ability to produce unfathomable amounts of natural gas. During the third quarter of this year, the company pumped the equivalent of more than four billion cubic feet of oil each day.

Total has staggering amounts of production capacity. At current levels of demand, the company has more than enough supply. But when Moscow gets aggressive and closes its pipelines, European demand will go through the roof. That means Total’s natural gas will sell for a premium. Its shareholders will get rich.

Sarkozy is hell-bent on making France the predominant player in the European Union.

France is all about advancing the interest of French industry. It’s one of the cornerstones of its policies. And it has always been the main directive of its government.

This means that Sarkozy will leverage the current crisis to the exclusive benefits of French companies. And the main beneficiary is Total.

Action Alert: Buy shares of Total (NYSE:TOT) at or below $58!

Oil Stock #4: Oil’s Great Game

BMB Munai Inc (AMEX:KAZ): The former Soviet republic of Kazakhstan rarely creates headlines in the American media. It is far more popular with Russia and China.

Both countries consider the Kazkhstan an important strategic point in Asia. And both love its oil and natural gas reserves.

The company you need to know about, BMB Munai, a tiny oil producer based in Kazakhstan. The company is young, financially well positioned and, more importantly, working in an ultra-rich, under-utilized part of the planet, the Caspian Sea.

This company has strong ties to the American and Russian government. Its current CEO used to be a big shot at Haliburton. He has “Inside-the-Beltway” written all over him…

How about the company’s chairman? Boris Cherdabayev has been a top employee at Exxon and Chevron. He has even worked for Lukoil, Russia’s largest oil producer. And BMB Munai’s president, Askar Tashtitov? This guy used to be a government consultant.

When it comes to being politically connected, it doesn’t get any better than this. BMB Munai’s wholly-owned oil-pumping subsidiary, Emir-Oil, was even created by the Kazakhstan government. With a market cap of just $66 million, the company’s $1.40 share price could double, even triple with just one turn of a pipeline valve.

(In fact, we just saw an incredible 65% spike in a single day… caused merely by expectations that talks between the Kazakh Chamber of Commerce and a Chinese trade delegation from Sichuan Province would generate good news for Kazah oil.)

By investing in this stock, you are investing in the company the American and Russian governments expect to be (or should I say will make) the region’s next big oil producer.

Action Alert: Buy shares of BMB Munai (AMEX:KAZ) at or below $2.00.

Oil Stock #5: Striking Black Gold

The next company you need to know about is Toreador Resources (NASDAQ:TRGL).

Toreador has stakes in the energy-rich Black Sea, a region expected to have more than enough natural gas and oil reserves to power Turkey and its neighbors for a long, long time to come.

Toreador Resources will be a prime investment target when Russia resumes its hostile activities. It was part of a team that first discovered natural gas in the Black Sea. It has the tools and products to find oil where no other companies were successful. Because of its technological prowess, it is sitting on a huge stockpile of black gold.

When Russia invaded Georgia last summer, Toreador showed its potential to smart investors. Share price soared by as much as 30% in just a few days.

Imagine what could happen to this $70 million company if the stakes are even higher. If Turkey becomes the next big target like so many experts believe, shares of this $3.40 stock could easily be selling for as much as $20, or more.

Invest in Toreador Resources now and profit as the next global crisis unfolds. When these predictions come true, you will look like an investing prophet.

Action Alert: Buy shares of Toreador Resources (NASDAQ:TRGL) below $4.00.

Source:The Top 5 Oil Stocks for 2009

Natural gas prices have tumbled by about 30% this year, as a steep drop in industrial consumption has undermined demand. However, many of the traders and hedge funds that placed speculative bets on the price decline are beginning to reverse course and bet on a price spike, as dwindling production is starting to outpace slumping demand.

Traders trimmed their net short positions on gas by 11% to 114,064 in the week ended March 10, the smallest since last July, Bloomberg News reported. Also, natural gas futures for delivery in January 2010 are trading at a 49% premium to the April contract, which means speculators are anticipating a price surge.

In its short-term energy outlook – released on March 10 – the Energy Information Administration said that total natural gas consumption is projected to decline by 1.3% in 2009 and then increase by 0.4% in 2010. But many energy companies have idled rigs, scaling down production and increasing the chances of a supply crunch if the economy starts to recover.

Just as natural gas prices have plunged below $3.90 per million British thermal units (btu) from a record-high $13.694/btu on July 2, the number of natural gas exploration rigs in the United States has fallen to 884 from a record 1,606 in September, according to Baker Hughes Inc.

U.S. natural gas rigs fell 15% to an average 1,037 in February, their fifth consecutive monthly drop, Baker Hughes said.

With so many rigs coming offline, fourth-quarter gas production could decrease by 5.2%, Bloomberg reported. That would outpace the relatively acute decline in natural gas demand forecast by the Energy Department.

“When the recession ends and the economy starts booming, we’re going to have less natural gas than we do today and prices are going to spike back up,” said Larry Nichols, chief executive officer of Devon Energy Corp. (DVN). “The drop in supply will be so steep, it could easily catch up to where demand has dropped to before the recession ends.”

It’s also likely that more exploration projects will be shelved, and more rigs idled, as economic turbulence continues to linger. The cost of drilling and servicing is double what it was just four years ago, and in that time credit standards have tightened and the cost of borrowing money has increased substantially.

“When everybody sobers up after the first quarter and sees what their real cash flow is going to be, people are going to be very discouraged about how much capital they have to spend and that will depress the rig count even further,” G. Steven Farris, chairman and chief executive of the energy company Apache Corp. (APA), told The New York Times.

Theresa Gusman, head of equity research for Deutsche Bank AG’s (DB) DB Advisors unit, told Bloomberg that spending on U.S. exploration and production will drop an estimated 40% to $22.5 billion this year.

Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania is among the analysts who believe natural gas will soar back above $7/btu in the next 12 months.

“The next big move for gas is obviously going to be up,” said Schork. “If we are higher, I’d expect to see us at $7 by the start of next winter.”

Source: Natural Gas Prices Could Double as Energy Majors Scale Down Supplies

Many in the mainstream press are calling an end to the “commodities bubble.” But oil and energy expert Byron King warns investors against betting against cheap oil and gold.

Byron says what we are seeing now is a short- to medium-term correction in the trends for energy and resources. Investors who buy beaten-up oil service stocks and gold miners now stand to make major profits…

Back when oil was in the $140s, I said – in both print and broadcast interviews – that oil prices were running up too far, too fast. I predicted that oil prices would decline to $100-110, based on the fundamentals. Well, we’ve seen the decline and we’re almost there.

High oil prices have caused big changes in patterns of consumption. Indeed, the U.S. Department of Energy just announced that U.S. oil demand fell by about 800,000 barrels per day during the first half of 2008, compared with the same period last year. This is the biggest volume decline in 26 years, since the recession of the early 1980s.

Sure, some headlines describe what’s going on as something like the “oil bubble” or “commodities bubble” popping. Some people are talking and acting as if we were going back in time to the last era of cheap energy, cheap gold and cheap commodities. But don’t believe it. Don’t bet on it. And don’t play the markets that way.

A Gold And Oil Correction Was Due

What’s going on? We are in the midst of a short- to medium-term correction in the trends for energy and resources. Keep this in mind: This is a CORRECTION, not a fundamental change in the long-term correlation of things.

The long-term trends are still upward, in terms of value and pricing. But for now, the money is leaving energy and resources for pastures that look greener.

What pastures are greener? Well — speaking of green — the U.S. dollar is strengthening. It turns out that the euro is not the powerhouse currency that a lot of people believed it was. So the dollar has been strengthening against the euro for the past couple of weeks.

The Euro Can Go Down

And it turns out that euroland has its own economic problems. In fact, the euro can go down against the dollar, as well as up. That’s exactly what has happened. Euro down, dollar up. So in consequence, we are seeing the dollar going up, and oil and gold going down.

There is more to the equation. The economists are describing a recession occurring in parts of the euroland economic space. Germany — with Europe’s largest economy — has been hard hit, so there’s been quite a bit of drag on the euroland economy.

And then there are indications that the long-awaited U.S. recession is finally just around the corner. Really, we are just in the middle innings of the banking meltdown and housing crash in the U.S. The recent stock market turnaround may just be the seventh- inning stretch. I expect to see more large banks and investment houses either fail or get bailed out before the end of 2008.

So with two of the world’s largest economies about to enter the doldrums, world markets are seeing demand for energy and commodities slacken.

Thus, we have monetary issues with the dollar. And there are demand issues with economic slowdown in two of the world’s largest economic blocks. Prices for benchmark items like gold and oil are falling.

Stocks to be looking at…

And this is taking the stuffing out of energy and gold stocks. The mining stocks are down. The oils and service companies are down. It’s painful to watch. But it’s not a reason to give up.

As I said, this is a correction. This is an August swoon. Share prices are down, so it’s time to look at your shopping list. You can pick up shares in 2008 and pay 2005 prices. You can build a portfolio for the next five years with some prudent stock picking in the next couple of months.

Some of the most beaten-up oil and oil service companies are Apache (APA: NYSE), Halliburton (HAL: NYSE), Baker Hughes (BHI: NYSE) and Superior Energy Services (SPN: NYSE).

Some of the most beaten-up miners are Kinross Gold Corp. (KGC: NYSE), Yamana (AUY: NYSE), Hecla Mining (HL: NYSE) and the development-stage NovaGold (NG: AMEX).

When oil and gold turn around – which they will – all of these companies should do very well.

Source: The Gold and Oil Correction