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The EIA's Latest Energy Outlook

Energy and Capital's Weekend Edition

Written by Keith Kohl
Posted January 16, 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.


So far, 2010 looks like it's going to be a great year for investors like us.

On Tuesday, the Energy Information Administration released their Short-Term Energy Outlook. According to the report, the oil market is expected to gradually tighten over the next two years, assuming an economic recovery continues.

Furthermore, world oil demand is projected to grow by 1.1 million barrels per day this year, followed by a 1.5 million barrel per day increase in 2011. It should come as no surprise that China's leading the charge.

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And on the other side of the equation, higher production in the U.S., Brazil, and the former Soviet Union are the biggest factors in non-OPEC supply growth.

  • Although oil prices in 2010 are expected to range between $60 and $100 per barrel, the $80/bbl mark is seen as the "comfort zone" for most analysts. That makes sense to us, for the most part. Whenever oil falls below $70 per barrel, we're in danger of losing crucial investments needed for future supply. On the flip side, producers need to be wary of public outrage whenever we see triple-digit oil prices.

  • Unlike oil, demand for natural gas is projected to remain relatively flat in 2010. Even after the number of natural gas rigs declined by approximately 60% in 2009, production still managed to increase by nearly 4%. With such an abundance of natural gas, how can we not take advantage of the situation?

  • Take Oilman T. Boone Pickens, for example. He is one of the few people out there that actually has a plan to face the upcoming energy crisis. This week, that plan changed gears when the billionaire announced that he has halved his order for wind turbines from GE, postponing his plans for a Texas wind farm. The 300 turbines he does receive will be sent to projects in Minnesota. This means that Pickens will be focusing his attention on a campaign to convert trucks to natural gas.

  • With coal prices already at a 14-month high, get ready for even higher prices. We can thank China for the boost. China, the world's largest coal consumer, might be forced to shut 11% of its power generators due to coal shortages.

Also, in case you missed some of our top stories this week from Energy and Capital or our sister publications, I've included them for you here:

A Nuclear Revival: An Easy Path to Nuclear Profits
Energy and Capital Editor Nick Hodge discusses the latest news in nuclear energy, showing readers two companies that will profit most from an upcoming nuclear revival.

The Bakken Oil Play: Profiting from a Bakken Mishap
Energy and Capital readers are taking full advantage of one tiny error regarding the Bakken oil field. It's a mistake that no one saw coming... from which only a few investors will profit.

The Cardium Oil Formation: Putting Alberta Back into the Game
After oil prices crashed in 2008, investors had practically written off Alberta's energy industry, moving to greener pastures in neighboring provinces. Energy and Capital's Keith Kohl explains why the Cardium Formation has investors coming back to Alberta.

Greenland's Gift: A 500-Square-Mile Hunk of Land Worth $273 Billion
Two weeks ago, Denmark lost control of Greenland's mineral rights. Up for grabs is one small piece of arctic tundra worth billions in rare earth metals. In this free report, find out the one company that is poised to control it all.

Peru Economic Boom Time: Peru at a Crossroads Between China and Brazil
Wealth Daily Editor Christian A. DeHaemer explains why Peru's market is about to break wide open for investors.

Boise Basin Gold: Once Again, the Stage Is Set for One of this Nation's Greatest Gold Rushes.
Wealth Daily guest editor Greg McCoach shares his research on an exciting domestic gold development.

The Basics of Options Trading: What Every Investor Should Know About Options
Wealth Daily Editor Ian Cooper gives readers the ins and outs of trading stock options. Be sure to read up on Ian's successful strategies before you make your next options trade.

iShares Peru EPU ETF: Peru Exchange-Traded Fund Delivers Major Gains
International Editor Sam Hopkins reports on why Peru is in a perfect location for future growth, highlighting two investments that offer investors a chance to get a piece of the action. Sam is currently in Lima, rooting around for the market's best profit opportunities, and will report to readers from Peru and share his findings upon his return.

Until next time,

keith kohl

Keith Kohl

Energy and Capital

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