Is Oil heading to New Heights?

Keith Kohl

Written By Keith Kohl

Posted February 28, 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.

Let the see-saw continue to go back and forth, up and down, as more investors throws their hands up in utter confusion.

For more than six months, traders have seen crude prices rock back and forth between $70 and $80 per barrel. Sure, there are a few days that oil prices make a run to $85/bbl, or briefly dip below $70/bbl, but never for long…

And lately, news of economic growth has bulls confident that crude contracts will make a run over $81 a barrel next week.

Oil Trader Phil Flynn isn’t convinced: "I guess the question you have to ask yourself if you are bullish is, ‘Why?’ The China demand numbers are suspect, it appears the dollar has bottomed and demand is tepid. The price of oil has been supported by the Fed yet with rising concerns of debt and credit issues in Europe the dollar is looking better every day."

Here are a few other stories caught our attention this week:

  • Total — a large French oil company — recently announced it is prepared to invest $20 billion in Nigerian oil and gas development. But do you honestly believe the Nigerian militants will decide to play nice? For years, Nigeria’s oil industry has been among the most volatile in the world. Attacks on both oil workers and the infrastructure have cut Nigerian oil production by one-third. Even though Total would only contribute $7 billion of full amount, it seems like the risks vastly outweigh the rewards in this deal. Then again, perhaps it’s just another example of how far companies are willing to go for oil. 

  • For months, OPEC has repeatedly stated the organization is "comfortable" with current oil prices over $70 a barrel. This comfort level is one reason that OPEC’s oil production is at a 14-month high, led by its leading member, Saudi Arabia, who increased crude output to $8.25 million barrels per day.

  • It appears that China is ready to increase refining capacity to 7.5 million barrels per day. Although the country is still behind the U.S. — which accounts for the world’s largest refining capacity at 17.8 million barrels a day — Chinese demand is projected to grow by 4.7% this year.

  • President Obama has a difficult decision in front of him regarding the expansion of offshore oil and gas development. One thing he understands, at least, is that our future energy security revolves around developing every potential energy source, and that there is no cure-all to our upcoming energy crisis.

Enjoy your weekend,

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.

Cardium Oil Stocks: Canada’s Secret Oil War… and Alberta’s Next Energy Boom
A quiet oil war is raging in Canada, and Energy and Capital‘s Keith Kohl explains why our growing dependence on Canadian oil has thrust Alberta’s Cardium formation into the spotlight.

Louisiana Land Rush: The Largest Gas Discovery in U.S. History
Just 271 miles northwest of New Orleans, development of one of the largest U.S. natural gas fields is underway. In fact, this new shale play holds more than 251 trillion cubic feet of natural gas. Four companies are at the forefront of this tremendous shale discovery and could make investors like us a small fortune.

SEC Mandates Disclosure of Climate Risk: The SEC’s Energy Game-Changer
Energy and Capital Editor Nick Hodge discusses how the latest move by the SEC could have serious consequences for your hottest energy investments.

The Death of Death: One Must-Have American Biotech for Your Portfolio
Disease is, without question, the world’s deadliest killer. Yet one tiny American biotech company is developing a vaccine that not only stands to boost both your immune system and your portfolio by 1000%.

5 Reasons to Invest in the Stock Market: Time to Slaughter the Herd
Wealth Daily‘s Chris DeHaemer puts the bears in their place, offering five reasons to be bullish on the market and economy.

Rare Earth Metal Supply vs. Demand: Where the Real Economic Crunch Exists
Wealth Daily Editor and trading expert Ian Cooper talks about an upcoming crunch in rare earth metals, focusing on how China could throw the supply and demand fundamentals out of balance within the next three years.

H1N1 Swine Flu Panic: The New Paradigm in Vaccine Delivery
Editor Steve Christ takes a moment to reflect on how the public has practically forgotten about the swine flu panic. More importantly, Steve shows you why that kind of thinking could become disastrous to both you and your portfolio.

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