BALTIMORE, MD -- Front month oil futures briefly fell by more than $2 a barrel today trading all the way down to $58.80, the lowest level since November 2005, as rising supplies and slack demand pushed geopolitical worries to the backburner.
There's no denying that the oil and overall energy market look bad. But don't worry. The recent fall in oil prices over the past few days is just due to short-term factors. The long-term fundamentals, however, are still in place for a continuing energy bull market.
Here's the short of it...
Oil's climb from less than $20 a barrel at the end of 2001 has been driven by the failure of producers to generate new supplies fast enough to keep pace with rising demand, especially in China.
Believe me, this will be a continuing trend.
That means that oil prices will continue their climb despite this recent pullback. Just look at this 2 year chart...
The trend here is clear: BULLISH!
What about natural gas?
After a 25% slide in natural gas prices from April to July, it looked as if the market was headed for a turnaround. But we had no such luck.
"Thomas Edison...Outta Here!"
A Tiny, $3.50 Massachusetts Tech Company is About to Save the World $112 BILLION on Their Light Bill!
It's already been called, "Product of the Year!" - Electronic Products Magazine
- As the traditional light bulb is thrown out the window, I'll show you how to cash in and stuff your pockets with more than 266% by 2008!
[Click Here for your free Report Now]
Since its 100+ day high set back on August 1st, natural gas has dropped off over 40%, trading at $5.74/Mcf in late afternoon trading today. Take a look...
Never mind this seemingly relentless decline in energy prices. I think natural gas has bottomed out, meaning we need to be buyers now.
Natural gas may not have positive price momentum yet; however, its current value is near the low end of its range in its normal relation to oil. This should give us some short-term support.
In addition to that, we're just ahead of the winter and natural gas has a tendency to spike sharply, especially if you get a period of very cold weather during the winter.
| Natural Gas Futures | |
| Nov 06 | $5.740 |
| Dec 06 | $7.423 |
| Jan 07 | $7.893 |
| Feb 07 | $7.973 |
Many investors are already hedging this bet, as reflected in the futures chain. Take a look at the four month chain to the right...
So what about the long-term outlook?
It's the same story: BULLISH!
The long-term fundamentals are still in place that will push natural gas prices once again over record highs.
Here's the story...
Over the past five or so years, the continual decline of indigenous supply and the increase in our demand for electricity generation has pushed prices higher.
This supply/demand conundrum still has the market by the neck and will surely continue to push natural gas prices higher in the foreseeable future.
Domestic production has fallen nearly 7% from about 20.5 trillion cubic feet in 2001 to 19.1 trillion cubic feet in 2005.
What does this mean for investors?
Well, it's just like Jimmy Rogers told Neil Cavuto on FOX News over the past weekend, "buy natural gas, you'll make a fortune."
Subscribe to