BALTIMORE, MD - Despite what the naysayers want you to believe, the oil bull is still on the run.
November '06 crude prices have plunged some 27% since mid July, trading all the way down to $58.92/barrel today. Take a look at the chart below. (Beware...it's ugly enough to make an onion cry.)
Ouch!
Possible motives behind the recent carnage include lessening tensions in the Middle East, a calmer-than-expected hurricane season, and robust growth in supplies.
But here's the thing...
These are just short-term factors!
Bad news folks - The natural gas goons have just locked us out of the world's largest supply. And even worse, it's almost winter time. Last winter, we consumed 17% more natural gas than we found. This winter we will need more. But Russia, China, and many other -istan's have a whopping 71% of the world's natural gas, and we can't get it. Luckily, if you read on, I'll show you how we can crack their cartel with America's own hot new energy pick that will leave them out in the cold. Click Here to Learn More.
The long-term fundamentals, on the other hand, are still in place for a continuing energy bull market that will eventually push oil prices to well over $100 a barrel.
That's right... I THINK $100+ OIL IS STILL ON THE HORIZON. Believe it.
Oil's climb from less than $20/barrel at the end of 2001 has largely been driven by the failure of producers to generate new supplies fast enough to keep pace with rising demand, especially in China and India.
This will be a continuing trend.
Look...the world now burns over 30 BILLION barrels of oil a year. That's a lot. In fact, with the gasoline produced from 30 billion barrels of oil, you could drive a Ford Explorer (getting about 20 mpg) around the circumference of the Earth nearly 50 million times!
But global oil consumption is only expect to increase from here on out.
According to the Energy Information Administration's (EIA) 2006 International Energy Outlook, "world oil demand [will grow] from 80 million barrels per day in 2003 to 98 million barrels per day in 2015 and 118 million barrels per day in 2030."
I think the increase in demand is pretty much a given. But rising demand alone isn't enough to push prices over the $100 mark. For that to happen we'll need a drop in supplies.
Fortunately, since the turn of the century, we've been able to increase production year after year. In 2005, the EIA says the world produced an average of 84.33 million barrels per day (MMbbls/d). This was an increase of 8.5% over 2000. But global production from the first two quarters of this year has averaged only 84.08 MMbbls/d, representing a 0.3% decrease and underscoring Peak Oil Theory.
If global oil production hasn't already hit the plateau, it soon will. Once that happens, we're in for sharp increases that will send oil prices into the stratosphere.
What I'm trying to get at here is this:
Don't lose a second of sleep over this short-term correction in oil prices. In fact, if anything we should be thankful that the market gods have granted us another chance to add to our positions. In short...buy, buy, BUY!
Take a look at a two-year price chart of oil for a minute...
Enough said.
You just can't argue with that trend...it's BULLISH!
Look...We've got to keep trucks moving, planes flying and cars commuting. And the way I see it is this: it's inevitable that oil prices-and all other energy costs-have nowhere to go but up.
And now that the market wants to give us a second chance to buy in at low levels...take it!
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