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Oil's Next Buying Opportunity

The Markets Are Ignoring the Fundamentals

Written by Keith Kohl
Posted October 24, 2009

Welcome to the Energy and Capital Weekend Edition — our insights from the week in investing and links to our most-read Energy and Capital and sister publication articles.  


After breaking the $75 a barrel mark recently, oil prices continued to climb during the past week. By Wednesday, prices peaked at $82 per barrel, closing $2.25 higher than the previous day. And even though a move back to $75 per barrel was expected, oil prices held steady over $80 per barrel.

Like many of you, I can't see oil holding this level much longer.

The reason?

For starters, the market seems to be ignoring the fundamentals. On the one hand, the oil glut is still a red flag waving in front of us, while demand remains weak.

As the EIA reported earlier this month, global oil consumption fell 3.2 million barrels per day during the first six months of 2009 (compared to 2008 levels).The EIA also expects oil prices to average $70 per barrel this winter.

Even a stronger dollar wasn't enough to cause a steep drop in oil prices.

According to a Bloomberg report on Friday, "The dollar strengthened against the yen to the strongest level in a month and gained versus most actively traded currencies on speculations the Federal Reserve will increase interest rates sooner than expected."

By the end of the week, the dollar found more support after a home sales report showed that U.S. existing homes sales rose to a two-year high.

For many, this news is a sign that the housing market is recovering. Personally, I'm not convinced. . . 

Is this the recovery sign you were looking for?  

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Buying Opportunity

The good news is that we can look forward to one thing: the next buying opportunity. Oil may be headed back toward $75 per barrel next week, which will put a lot of our oil and gas back into our target range.

Next week, we'll take a look at some of those energy companies, especially as this sell-off continues.

Enjoy your weekend,

keith kohl

Keith Kohl

Energy and Capital

In case you've missed any of the recent top stories from Energy and Capital and our sister publications, I've included them below. . .

Smart Grid Stocks: The Trillion Dollar Transmission
Energy and Capital's resident green expert Nick Hodge introduces his readers to the future of our energy infrastructure and the new smart grid.

Solar Thermal Companies: Siemens Acquires Solel for Solar Market Strength
Green Chip Editor Sam Hopkins takes a fresh look at one investment that is strengthening its share in the green market after acquiring a small solar company.

Doubling U.S. Energy Production: Investing in Our Future Infrastructure
A small group of "Super Start-Ups" are about to dominate this billion dollar market. Nick Hodge lays it all out there, showing investors how they can cash-in on our aging infrastructure.

Biotech Company Buyouts: How to Catch the Building Wave in Biotech Stocks
Wealth Daily Editor Steve Christ offers readers a chance to profit off the latest biotech surge.

The Gusher Behind the Montana Millions: Your Last U.S. Oil Play
It's one of the largest oil discoveries ever made in the U.S., yet producers are only now beginning to unlock this Montana gusher. Of course, the door is wide open for investors who are in the know. . .

Technical Trading Made Easy: 3 Tools You Can Use to Easily Spot Stock Trends
Editor Ian Cooper shows you 3 ways you can be sure your next trade won't be a loss. Using these time-tested investing techniques will help you spot trends in the market — and could be the difference between your next winner or loser.

The Best Biotech Stock for 2010: Grandpa's AMBER Alert Could Make you $1 Million
Wealth Daily Publisher Brian Hicks looks ahead at a growing problem with Alzheimer's and focuses on one biotech play that may have found the answer.

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