Such a wide gap between near month contracts is unusual.

But, “The last standing bulls are rolling over” to buy the February contract while “dumping their January oil on the market,” said Phil Flynn, of Alaron Trading.

Meanwhile, OPEC President Chakib Khelil said that the cartel could continue to slash its output, beyond the 2.2 million barrel/day cut already agreed to.

“We will continue this reduction until the price will stabilize,” Khelil said, while adding that, “We feel very strongly that what happened in 2008 and what’s happening now is due in great part to the speculation.”

And Saudi Arabian Oil Minister Ali Naimi reiterated that $75 a barrel was a “fair and reasonable” price for oil. We shall have to see whether the market agrees.

Source: Crude has wildly divergent day

Oil prices steadied on Friday, after falling more than 7 percent the day before, as stock markets recovered from early lows caused by continuing economic gloom.

U.S. crude fell 13 cents to $49.29 a barrel at 12:08 p.m. EST (1708 GMT), after earlier hitting $48.25, its lowest level in three and a half years. London Brent crude gained 53 cents to $48.61 a barrel.

U.S. stocks recovered slightly after falling into negative territory on Friday as shares of financials, including Citigroup , declined and investors worried about the deepening economic slump.

Slumping demand in the United States and other top oil consuming nations has sent crude prices plunging from record highs above $147 a barrel in mid-July.

On Thursday, oil fell more than 7 percent on gloomy economic data, to settle at its lowest since May 2005.

“Obviously, we are reluctant to call a bottom to this dramatic price decline that is now approaching 4-1/2 months. The attachment between the oil and stock markets will likely remain valid, at least through month’s end,” said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.

JP Morgan said on Friday it expected world oil demand in 2009 to decline by 500,000 barrels per day as the global credit crunch continues to rack the world economy.

Members of the Organization of the Petroleum Exporting Countries will meet in Cairo next week, but may not take any decision to reduce output to defend prices.

“In Cairo we will not have the complete data about the market,” OPEC President Chakib Khelil said. “It’s very possible that we will not take a decision until we will see the impact. This impact will not likely be seen until December.”

OPEC will meet on Dec. 17 in Oran, Algeria.

Industry consultant Petrologistics estimated OPEC oil production will fall by 1.22 million barrels per day in November.

OPEC agreed in October to cut output by 1.5 million barrels per day from Nov. 1, but the move has failed to stem the decline in oil prices.

OPEC President Chakib Khelil said Sunday that the oil cartel may have to wait until December to take action to reach an oil price of $70 to $90 a barrel, since the impact of its latest supply cuts was not clear yet.

But OPEC’s emergency cut that began November 1 “did not mop up excess supply in the market – and another cut in December … may need the cooperation of non-OPEC members to have any teeth,” said Thomas Hartmann, of Altavest Worldwide Trading.

In the meantime, “the continued rumblings of OPEC moving yet another meeting up ahead of schedule to continue slashing output, coupled with the U.S. entering peak heating demand season are helping set a floor under prices,” wrote Neal Ryan, of Ryan Oil & Gas Partners.

Ryan added that, “We’re quickly getting to a point where falling prices are going to cause a greater whiplash upwards in price when the global economy recovers in the coming two years.”

Source: Crude Off Again

Crude oil for June delivery reached $129.331 per barrel on the New York Mercantile Exchange, eliciting dismissive comments from industry experts who say the United States attempts to bring prices down have already been checkmated. Indeed, after a series of repeated failures in that venue, it’s clear the final United States recourse is to break what President George Bush referred to in 2006 as an “oil addiction.”

And that will take years.

Last week, on the same day Bush made a visit to Saudi Arabia, the world’s leading exporter of oil announced it would pump an additional 300,000 barrels of oil a day next month. But investors and analysts alike shrugged off the increase as an insignificant, and token action.

“The 300,000 barrels a day hike in June didn’t help at all,” Eugen Weinberg, an analyst at Commerzbank AG (OTC: CRZBY), told Bloomberg News. “The market is still very robust.”

Since the announcement, Saudi Arabian officials, and many of their colleagues in the Organization of Petroleum Exporting Countries (OPEC), have played down the increase, making it clear that they don’t intend on taking any further action to boost supply. OPEC president Chakib Khelil said Monday the oil group would make no decision on output levels before a meeting in September.

“Current prices aren’t linked to the law of supply and demand,” said Algerian Energy Minister Chakib Khelil, OPEC president, according to government newspaper El Moudjahid.

Khelil forecasts approximately $80 billion in national oil revenues in Algeria for the year.

The U.S. government took another swing at undercutting the price of oil by halting the shipment of oil to the country’s emergency stockpile. President Bush signed off on the bill Monday – even though he had opposed it – in the hopes it would somehow soothe investor speculation, but oil prices have continued to advance.

“He remains against it,” deputy press secretary Scott Stanzel told Reuters, but “I think he saw the overwhelming numbers of members of Congress who want to attempt to have an impact on prices by stopping the fill of the Strategic Petroleum Reserve.”

“Congress keeps… going from Band-Aid to Band-Aid that they think will have an impact but really won’t.”

Congress had previously applied pressure on the president as he left for Saudi Arabia, by introducing legislation to stop a scheduled arms sale to Saudi Arabia unless the country opened its valves a little wider.

“When the President meets with King Abdullah Friday, we cannot settle for a smile, or a handshake, or even a glimpse into his soul,” Senator Charles Schumer of New York said. “We need a commitment to pump more oil. If Saudi Arabia and other OPEC countries do not substantially increase production, we in Congress will block their lucrative arms deals.”

Still, neither the Saudi increase or diversion of oil from the U.S. emergency stockpile have taken the sting out of record-high oil prices, which have driven the price of gasoline up for 13 straight days.

Gas prices roared above $3.75 a gallon yesterday, as the average national price of a gallon of regular gas rose 2.6 cents overnight to a record $3.758 a gallon, according to AAA and the Oil Price Information Service. Gas prices are 67 cents higher than a year ago, and are expected to continue rising through the Memorial Day weekend.

Unfortunately, the American consumer – already hampered by a credit crisis, a lack of home equity and soaring food prices – will find no reprieve at the pump, as oil prices seem destined to keep rising.

It was just last week that Goldman Sachs Group Inc. (GS) raised its price forecast for the second half of the year to $141 a barrel. Goldman Sachs analysts had previously quoted a price of $107 a barrel.

That assessment was corroborated yesterday by billionaire hedge fund manager T. Boone Pickens, who said the price of oil would reach $150 a barrel by year’s end. Pickens’ Mesa Power LLP recently unveiled the first phase of an eventual $10 billion alternative energy project that has the potential to become the world’s largest wind farm.

“You find an oilfield, it peaks and starts declining, and you’ve got to find another one to replace it,” Pickens said of the deal. “It can drive you crazy. With wind, there’s no decline curve.”

Though Pickens once operated one of the largest independent oil-and-gas production companies in the country, he believes it’s time for a new energy direction.

“We are going to have to do something different in America,” Pickens said. “You can’t keep paying out $600 billion a year for oil.”

Money Morning Investment Director Keith Fitz-Gerald – a longtime energy bull – thinks prices will ultimately spike as high as $225 a barrel.

That projection represents a revision from a market call he made in December, when crude prices were in the $90-a-barrel range. At that time, Fitz-Gerald caused a stir when he predicted that oil prices were headed for $187 a barrel. He reiterated that prediction back in early March – just before the investment-banking crowd started making their hefty forecasts for oil and gasoline.

With no end in sight for soaring oil prices, the United States finally began working towards a greater level of energy independence with the Energy Independence and Security Act, which mandates that alternative fuels be mixed into the nation’s gasoline supply and requires cars to have a fuel economy standard of 35 miles per gallon by 2020. 

The act became a law in December 2007 and the effects can already be seen. In the first three months of 2008, foreign oil imports accounted for 57.9% of the United States’ oil supply versus 58.2% a year ago. The drop may have been slight but it was the first decline since 1977, the Financial Times reported.

Foreign oil dependency is expected to fall from 60% to 50% by 2015, before rising back to 54% in 2030 according to the Department of Energy.

“The 1970s is the last time we saw any significant decline in net import dependency in the U.S.,” Guy Caruso, head of the U.S. Energy Information Administration, told the FT. “It shows that markets do work, policy changes do work, technology does work.”

Reducing the amount of oil it imports from overseas seems right now to be the only viable solution to the country’s energy conundrum, as oil prices show no signs of abating in the near future.

Source: With Oil Nearing $130, Kicking the ‘Oil Addiction’ Looks Like the Sole U.S. Hope

The high and rising price of oil is causing real pain in the heartland… and yet the view looks quite different from the Middle East.

Chakib Khelil, the Algerian oil minister and president of OPEC, has flatly stated that “there is no shortage.”

The oil minister of Qatar is even more blunt. “The market doesn’t need more oil,” he says.

Hussain al-Sharistani, the oil minister of Iraq, takes the strangeness even step further. “There is more oil in the market than consumers want,” he argues. (Which begs the question: Which consumers exactly?)

There is obviously plenty of bad news in crude oil’s meteoric rise. But the bright side is, real pain means the U.S.A. — and much of the world — is finally on the cusp of real change. That means profit opportunity on a major scale.

Nosebleed Oil Prices — Whose Fault?

A few weeks ago, OPEC members seemed to shrug their collective shoulders at the thought of $200 a barrel oil. President Khelil points out that much of the price rise is due to a weak dollar. (Every one percent decline in the dollar’s value, OPEC estimates, increases the price of crude by $4 a barrel.)

So the dollar is one major culprit. But there are many other small factors that add up.

For example, China, after suffering through its worst earthquake in decades, has had to shut down mines and wells for safety reasons. Apart from the terrible human tragedy of more than 34,000 lives lost, this can only add upward pressure to oil prices.

In South America, Venezuelan oil exports recently dropped to a five-year low, and evidence is mounting that the country has become a state sponsor of terrorism under Hugo Chavez.

In Nigeria, rebels continue to keep oil and gas production on a knife edge. In places like Russia and Mexico, oil and gas output is declining at an eye-opening rate.

The little things pile up; if it’s not one thing, it’s another. This is generally the case when supply and demand are so tightly matched there is almost no margin for error. That’s where we stand now in terms of global oil demand vs. available daily supply.

It’s not rocket science to see how all these factors add up to $127 a barrel oil. For years, naysayers have been telling us that the price of oil was about to collapse and head back to ‘cheap’ any day now.

Of course, what was cheap just kept edging higher and higher. First it was $25 a barrel. Then it was $35. Then $45, $55, $65. And now we’re at the point where $85 or $90 a barrel oil would probably seem ‘cheap’ relative to today.

Growth and More Growth

The supply side of the equation is tough and getting tougher. And when we look to emerging markets, it becomes clear that the demand train isn’t slowing down.

The U.S. consumer might be spent, but consumers in other countries are just rolling up their sleeves.

For example, Bloomberg reported last week, “China’s retail sales climbed at the fastest pace since at least 1999, signaling that domestic consumption may help to buffer the world’s fourth-biggest economy against an export slowdown.”

At the same time, Thailand reportedly booked its fastest growth in two years in the first quarter of 2008.

A key debate these past few years has been whether or not domestic demand growth would kick in strong enough, allowing export-heavy regions of the world like Asia to become captains of their own economic fate. The evidence suggests this is happening.

Then add to that mix the fact that shopping malls are spreading like wildfire in Russia, cheap cars are conquering India, Southeast Asians are doubling and tripling the amount of meat in their diets, and so on.

For much of the 20th century, the Western world threw a party that the rest of the world missed out on. Now that the West is miring itself in economic slowdown, ROW (a common Wall Street acronym for “rest of the world”) seems to be saying, “No thanks. We’re not much interested in your pity party, either… but we do intend to get our fair share of those resources you’ve been hogging.”

The Good News

Again, there is plenty of good news, too.

High oil prices may be here to stay, but the reasoning behind this phenomenon is not all bad. It’s a good thing for ROW to be coming on line… to see new wealth being created, new economic breakthroughs, new dreams of escaping poverty and hardship on a grand scale.

And here in the land of plenty (the United States), it’s good to see habits truly changing for the first time. It was a phenomenon itself these past few years how stubborn the American consumer seemed to be in the face of rising gas prices.

No matter how much pain was felt at the pump, we just kept driving. The gas-guzzler culture seemed to be bulletproof. Ford Excursions and Chevy Suburbans just kept rolling off the lots.

“I have reserve capability, in particular our Navy and our Air Force so it would be a mistake to think that we are out of combat capability…” said Mr. Mullen.

Tough words…

Bullish news for oil.

Here at Profit Hunter we don’t dwell on the politics, but it is at the heart of the sort of profit opportunities that we uncover.

The upshot of the latest American move is that the “risk premium” which adds up to $30 to the price of a barrel of oil – isn’t going to disappear anytime soon.

If anything, it will increase.

As the Americans talk tough… the Persians act smart

“Official says Iran quits using US dollar for oil deals,” states a headline in the International Herald Tribune.

They’re quoting a top official from Iran’s oil ministry who made the statement on Iranian television yesterday.

As Profit Hunter readers will know, Iran’s been heading down this road for a while.

At a summit in Saudi Arabia last year, Iranian President Mahmoud Ahmadinejad dismissed the falling dollar as a “worthless piece of paper.” Iran actually ditched the U.S. dollar for international oil transactions last December. They’re selling in euro and yen these days.

So why on earth did they bring it up again today in full glare of the international media? Because it’s more bad news for the dollar, which is good news for the price of oil.

As OPEC President, Chakib Khelil, explains… each 1% decline in the value of the dollar drives the price of oil up by $4.

Iran is OPEC’s second largest oil exporter and oil and gas make up the bulk of the country’s $80 billion in exports. If anyone wants to see the price of oil continue to spike, it’s the Iranians.

Remember, oil is still priced in dollars. The Iranians just don’t want to be left holding a falling currency when they get paid.

Investing in oil ISN’T the best way to play this boom…

We expect the price of oil to keep rising.

But as I have pointed out before, we don’t think the best profit opportunities from this trend come from investing directly in oil. There’s too much volatility in the price.

The REAL money is going to be made by putting your money into the fast growing companies operating in the regions that are profiting from the petrodollar boom.

Some of the biggest winners have been the Middle Eastern countries. But getting into their markets isn’t easy for foreigners, so most British investors are going to be shut out of this fantastic opportunity.

Here at Profit Hunter though, we have already got exposure to this exciting growth story (sign up for a three month trial here and you can have all the details).

And we now look to a number of other interesting opportunities taking shape in that booming region…

Where the big money is heading…

The shift in economic power is being felt far and wide across the emerging economies. And it isn’t all about oil and commodities.

By the end of last year, China had three of the world’s biggest banks in terms of market capitalisation.

As the sub-prime shockwave hit, b anks in North America and Western Europe saw $695 billion dollars in market capitalisation evaporate by the end of 2007.

Banks in emerging market countries saw their market value soar by $753 billion dollars.

Return we will, to old Brazil

One of the biggest winners from the boom in emerging economies has been Brazil.

The Bovespa Index has shot up by 37% over the last year. That’s a nice change from the FTSE’s miserable 6.5% decline over the same period.

Foreign investors have been flooding into the country too… Brazil pulled in a record $34.6 billion in foreign direct investment last year. It got $18.8 billion the year before. They’re running a $40 million trade surplus and they have gone from being a debtor to a creditor country.

That was more good news than the analysts at international credit rating agency Standard & Poor’s could handle. They raised the country’s rating to “investment grade” yesterday. Many analysts weren’t expecting that to happen until next year.

The Bovespa leaped by 6.3% to a new record high on the back of the news…

Of course, S&P also told us that the sub-prime securities, now dragging the western financial system down, deserved a triple-A rating

Is this a brave new world or the next great bubble?

We haven’t had direct exposure to the Latin giant since we closed out our position in the county’s second biggest bank, Banco Itau, with a 58.1% gain last August.

Brazil was good to us and there is a lot going on there now… which makes me think of that old Frank Sinatra song…

Now, when twilight dims the sky above
Recalling thrills of our love
There’s one thing I’m certain of
Return I will to old Brazil

Find out about the profit opportunities we disclose to our subscribers here

Regards

Manraaj Singh
Editor
Profit Hunter

No sooner had the words “oil at $120 per barrel” left my lips yesterday, Chakib Khelil, President of OPEC, said it could hit $200 and there was little he or his cartel could do about it.

It’s making Americans restless…

A group of senators have just written a letter to President Bush accusing the Saudi’s of slashing oil production by 2 million barrels a day over the last three years, even as the price of oil has skyrocketed.

The Saudis don’t seem too bothered about America’s oil woes. Of course, the U.S. is making OPEC’s job so much easier…

Its interest rate cuts are driving down the value of the dollar and its sabre rattling at Iran is boosting the “risk premium” in the price of oil.

Some analysts have put the value of that premium at up to $40 per barrel.

But the simple fact is…

OPEC won’t raise output… non-OPEC producers can’t

OPEC simply won’t raise output, the non-OPEC producers simply can’t.

Right now, the non-OPEC countries produce about 60% of global oil supply – about 50 million barrels a day. But they’re stuck there. In fact production is falling quickly in some of the biggest of them.

Norway’s output has fallen by 25% from its peak in 2001. British output has slumped by 43% in eight years. In America, the giant Prudhoe Bay field in Alaska has seen output drop by 65% from its peak two decades ago…

And in Mexico, production at the giant Cantarell oil field is collapsing and they haven’t found any new fields to replace it. But Mexico’s economy is growing rapidly. So, domestic consumption is shooting up while production is falling. Mexico’s exports could be wiped-out within five years. That means more sleepless nights for America’s leaders because Mexico is the second-biggest oil exporter to the US.

Then there’s Russia… the biggest contributor to the growth in global energy supplies over the last decade. Output shot up from about 6 million barrels in 1996 to about 10 million barrels per day today. But the Russians say that they’ve hit peak production… so it’s all down hill from here.

Of course, huge chunks of Siberia are still unexplored and there could be lots more oil out there.

But the Russian government has shown a nasty habit of muscling-out Western companies operating in the country to gain more control over its energy resources. So they are reluctant to invest and we probably won’t see any meaningful growth in supplies there for years.

OPEC turns the screws on global oil prices

As they see output falling everywhere, OPEC is steadily turning the screws on global oil prices.

I think it’s almost funny to watch the reactions of politicians everywhere. Someone must have forgotten to tell them that OPEC is a cartel. Its job is to make its members rich, not provide cheap oil to faltering Western economies.

And it must be doing something right… because the petrodollars are really beginning to pile up.

Sovereign wealth funds already control $3.5 trillion in assets – that’s more than the U.K. French or German economies are worth. But that’s nothing compared to what’s still to come…

By 2015, their assets will be worth more than the entire U.S. economy and by 2016 they will overtake the European Union.

Leave China out of that equation and practically all those sovereign wealth funds are being boosted by the rising price of oil.

And the fastest growing funds are based in oil producing countries that don’t figure on most investor’s maps.

In the last five years, Nigeria’s SWF has grown by 291%, Oman’s by 256%. Kazakhstan’s SWF is up 162%; Angola’s by 84%…

How to ride the ‘petrodollar’ bandwagon

Now you can’t invest directly in a sovereign wealth fund, but they’re an excellent way of keeping track of where the money is going today and where the biggest economic booms are happening right now…

The point that I’m trying to drive home here is that high oil prices aren’t going to benefit all the oil producers equally.

The real tide of petrodollars is flowing to the OPEC countries. The big winners are going to be countries like Nigeria and Angola, Venezuela and Bahrain… and we can already see the winners and losers in the new equation.

Here at Profit Hunter we are well placed to benefit from this tide of wealth, which can only increase in the years ahead.

We aren’t directly invested in oil. There are too many unknowns that go into its price. Instead we are focussed on uncovering the investment opportunities being opened up by this dramatic shift in economic power.

And we have no doubt that that shift is going to continue.

We’ve been emphatic that we are now in the era of $100 oil. I doubt that we are ever going to see it go back below that price for a sustained period.

What does all of this mean for us as investors?

Simple – if we can tap into the same pools of capital that are fuelling the growth of these sovereign wealth funds, we are going to be on to very good thing indeed.

You’re very welcome to join us… just follow the links below
Regards,

Manraaj Singh
Editor Profit Hunter

“Whether we are already at the peak in world oil production remains to be seen, but it is increasingly clear that the outlook for oil supply signals a period of unprecedented scarcity,” he wrote. “Oil supply will hardly grow at all, with average production between now and 2012 rising by barely more than a million barrels per day.”

Similar forecasts emerged yesterday, and now OPEC president Chakib Khelil has chimed in with his own $200 call. “Mr Khelil blamed record oil prices on the weak dollar and global political insecurity,” reports the Financial Times. Quoted in El Moudjahid, the government newspaper of Khelil’s home country of Algeria, he said, “I don’t think that an increase in production would help lower prices, because there is a balance between supply and demand and the stocks of gasoline in the
United States have recorded a surplus and are at their highest level for five years. The prices are high due to the recession in the United States and the economic crisis, which has touched several countries, a situation that has an effect on the value
of the dollar. Each time the dollar falls 1 per cent, the price of the barrel rises by $4 and of course vice versa.”

Any comment, Mr. Strong-Dollar Hank Paulson? Hmm, didn’t think so.

Meanwhile, the New York Times, citing Rubin’s forecast among others, points out that non-OPEC oil production is flat-lining and OPEC production likely can’t pick up the slack. Not exactly news to those of us who’ve been paying attention for a while, but it’s worth noting any time awareness spreads.

According to the paper: “Questioned about a possible rise which would go to $200, the minister did not rule out this eventuality, explaining that this rise is indexed from now on to the fall in the dollar or to the rise in the dollar.”

Peak Oil expert Byron King was ahead of the curve on the role of the dollar in pushing up oil prices. Last week Byron wrote this in his Energy and Oil blog. “A declining dollar hurts all Americans, and every dollar holder in the world. Call it ‘Battered-Dollar Syndrome.’ A declining dollar works against long-term investment. The late economist Kurt Richebacher used to say, ‘A declining currency destroys capital.’ Still, somebody must think it is OK to devalue the dollar, because that is one of the key drivers behind the rising price for oil.

“The world oil supply has become very tight. Demand is rising. The price for oil would ordinarily be going up to clear the market. But with all the ‘extra’ money creation coming out of the US Fed, oil prices are going up even faster. And I should add that just the expectation of loose money is also inflating the price of oil. There is probably $15-20 worth of ’speculation premium’ built into every barrel.

Crude rose as “the dollar is down again and the Nigerian rebels MEND made good on their threats to have more attacks in Nigeria,” said Phil Flynn of Alaron Trading.

The Movement for the Emancipation of the Niger Delta, or MEND, said its members blew up two more oil pipelines in southern Nigeria, leading Royal Dutch Shell to say it will cut oil production by 169,000 barrels per day in Nigeria. MEND said the pipelines attacked belonged to Shell and Chevron.

And OPEC President Chakib Khelil said there is no need for the cartel “to raise its production now… any increase in output will not affect oil prices because there is a balance between supply and demand.”