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Is $100 Oil Around the Corner?

Energy and Capital's Weekend Edition

Written by Keith Kohl
Posted April 3, 2010

Welcome to Energy and Capital's weekend edition — our insights in investing, as well as the top stories this week from Energy and Capital and our sister publications.


Things are starting to pick up... again.

Since the summer of 2009, oil's been stuck trading in a range between $70 and $80 per barrel. We were forced to watch — no matter how bullish or bearish we felt.

And then April Fools Day came around and pulled a prank on us all.

During trading on Thursday, oil contracts reached as high as $85.37 per barrel before settling at $84.87/bbl.

Honestly, I was waiting for someone to spring out and yell, "Gotcha!"

So what's been driving prices?

For starters, oil traders dismissed the slightly bearish EIA report this week, which showed a 2.9 million barrel increase in U.S. inventories. The real push in demand has been coming straight from China.

(Let's be honest, we've had our eyes focused on China's demand for two years, knowing that any recovery would help push prices higher... )

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And it's no secret that Chinese demand is on the rise. Consumption has increased more than 21% over last year's levels. If that's not enough, just look at how the cost of shipping. Supertanker rates have risen, and nearly 13 million barrels of crude oil are sent every day to Asia from the Middle East.

Although the threat of triple-digit oil prices is right around the corner, OPEC members insist that oil will be trading its current range for the rest of 2010.

Here's a look at some other news stories that caught my eye this week:

  • President Obama's move to expand offshore oil and natural gas drilling is sure to draw fire. The proposal will allow drilling 50 miles off the coast of Virginia, as well as close oil and gas lease sales in Alaska's Bristol Bay.

  • The latest Baker Hughes oil rig count jumped to an 18-year high, reporting 502 rigs that are currently operating across the U.S.

  • And speaking of rig counts, I'll give you one guess where a record number of rigs of drilling... North Dakota. With 103 rigs currently drilling in the state, it doesn't take a genius to see that the famous Bakken oil boom is in full swing.

Have a Happy Easter,

keith kohl

Keith Kohl

Energy and Capital

P.S. In case you missed some of our top stories this week from Energy and Capital or our sister publications, I've included them below.

9 Things We'll See Down the Back Side of Peak Oil: Adapting to a Post-Peak Oil World
Energy and Capital's Keith Kohl takes a light-hearted approach to the events that will occur as the U.S. slides down the back side of the peak oil curve.

North Dakota's Recession-Proof Secret: The Secret Behind the Bakken Boom
Energy and Capital readers know a good thing when they see it. During the first round of Bakken profits, my readers walked away with gains of 114%, 103%, and 45%. In this report, you'll have access to three new Bakken plays that can't lose — especially with higher oil prices on the horizon...

Unique Water Investments: The Commodity War About to Commence
Editor Nick Hodge warns readers about the upcoming commodity crisis. More importantly, however, Nick shows you exactly how you meet the next commodity war head-on.

Funding the U.S. Debt Binge: Are Guaranteed Retirement Accounts the Answer?
Wealth Daily Editor Steve Christ breaks down the problem that Uncle Sam is having with debt. Read Steve's latest views on how the government's "solution" will play out.

Chinese Cleantech Companies: Up for Grabs: $94.7 Million Per Day
Wealth Daily's Nick Hodge reports on the latest news on the world's energy race as China pulls away from the pack. Learn how you can take advantage of China's burgeoning energy scene.

Washington's Other Undeclared War: Congress' Secret Offensive
You have two choices: Lose it all or make a fortune. Sounds like an easy decision, doesn't it? Right now, every one of us is danger of losing our hard-earned savings as the war for American retirement rages on... don't miss this report from Energy and Capital.

Officials Wake Up to Peak Oil Part 1: The End of Peak Oil Denial

In this first part of a two-part series, Energy and Capital Editor Chris Nelder outlines several new studies suggesting oil production will soon go into permanent decline, and how officials outside of the U.S. are beginning to come to grips with reality...

Hydrogen Fuel Cells: The Downfall of Tesla?