Oil prices could fall as low as $20 a barrel in early 2009, says Jason Simpkins. But don’t expect these low prices to last long. Dwindling investment will prompt a longer-term supply crunch, which will send crude to new record highs. Jason gives seven ways to profit from this coming spike.
As the economic crisis continues to unfold, recently a sense of uncertainty has begun to pervade the market. Even dyed-in-the-wool risk takers admit that they don’t know what to think anymore. Inflation, deflation, recession or depression – there are so many vagaries that it appears to be anyone’s guess what will happen next.
And, as the news just keeps getting worse, Iran just asked OPEC to cut production by a further 1.5 million barrels per day, which comes just after OPEC cut production by 1.5 million barrels last month! Yikes!
Reserves of high-grade oil are in decline, says Byron King. Other hydrocarbons will be required to meet energy demand over the coming decades. But the cost of extracting and refining these resources is much higher than the current market price of crude. And that’s why cheap fuel is definitely not here to stay.
Crude oil prices slipped below $60 a barrel yesterday, taking the black goo to a 20-month low. But that doesn’t change the fundamentals. Oil production is levelling out, and will soon begin to fall. Andrew Gordon expects crude to soar back toward $200 after a short pause. And Big Oil companies that are still investing in new projects will shine.
There are great wealth-creating opportunities in today’s miserable markets, says Andrew Snyder. Take oil, for example. The black goo is on a slippery slope towards $50 a barrel, and no OPEC production cuts are going to stop this in the short term. Andrew says the UltraShort Oil and Gas ProShares ETF (AMEX:DUG) is the best way to profit from the oil industry’s downturn.
Back in July, Money Map Report editor Horacio Marquez recommended Chevron Corp. (NYSE:CVX). William Patalon III says the company is still a good buy. It is expected to post strong 3Q results at the end of the month, but its share price has been discounted to bargain levels by market panic.
Oil was given a lift yesterday. But at $81.19 a barrel, the black goo is still almost $70 from its July peak.
Greg Guenthner isn’t sweating it.
Oil prices have been caught up in widespread panic selling of recent months. It remains a scarce and essential commodity. This means it is only heading in one direction over the long term.
Greg recommends following oil guru Richard Rainwater’s cue and buying into oil stocks with both hands.
Is nowhere safe? Even physical assets – which are usually considered a safe-haven from stock market turmoil – have fallen sharply in the last month. Only gold and silver have held up against the tide…just. Commodities specialist Lee Lowell says there will be plenty more volatility in the weeks to come. But he says those who do not join the panic selling will win out in the end…
US Energy Secretary Samuel Bodman says the America’s “nuclear renaissance” could be derailed by the credit crisis.
But Smart Commodities UK editor Garry White says a number of nuclear power projects are already underway in other parts of the world. India plans to build between 18 to 20 new nuclear plants over the next 15 years. Even the Middle East is shifting to the atom for its future energy needs.
Nuclear plants are also proven to be effective at water desalination. This will be vital in emerging markets, where populations are rising rapidly.
