Welcome to the Energy and Capital weekend edition — our insights in investing, as well as the top stories this week from Energy and Capital and our sister publications.
What started out as a shaky week for crude oil quickly turned into a buying frenzy.
The concern was whether crude prices could rebound back over $70 per barrel. After dropping to a low of $68.59 per barrel, pessimists were out in full force, saying that oil prices would soon retreat to $60 per barrel.
We knew better than that…
By Friday, oil prices advanced more than 5%, moving higher on news that U.S. stockpiles of crude oil dropped more than 3 million barrels.
Natural gas, however, was the real winner. We’ve been waiting for the cold weather. On Thursday, prices jumped after the EIA reported a record supply drop in storage levels. Even though inventory levels are still 14% higher than the five-year average, the brutally cold weather might just be a precursor for things to come.
Now, with the New Year right around the corner, a lot of questions have surfaced. And judging from the feedback my readers have been sending in, there’s some debate as to which trends to follow.
But I don’t want to just stick with one specific market or philosophy.
Rather, I want my readers to look at the whole picture. Trust me, dear reader, if 2009 taught us anything, it’s that there’s plenty of room to grow.
That’s why I’d like to give you an insight into the thoughts of my colleagues — some of the best minds in the business. I asked some of them to tell me what investors can look forward to in 2010…
Options guru Ian Cooper, managing editor for Pure Asset Trader and Options Trading Pit, remains bullish for the first few months of 2010, despite a few doubts on the stability of the current rally. He’s calling for further downside, as Option ARM resets are met with higher unemployment, further housing glut on the market, and the death of the consumer. That’s not to say people should throw in the towel. He’s determined to bring those hidden bull markets to his readers.
Global investor and managing editor of soon-to-be launched Crisis and Opportunity Christian DeHaemer sees opportunities outside the United States. He recently told me, "Mongolia is the best positioned, most undervalued country to take advantage of the weakness in the U.S. dollar and the continued power of the Chinese economy. There are a number of new deals in coal, gold, copper, uranium, and rare earth minerals."
When I asked Steve Christ, founder and editor for The Wealth Advisory, for his thoughts on what to expect in 2010, he confidently replied, "The wave of liquidity that has floated the markets off the bottom will continue into the first half of the year. That’s why I think we can still reach new 52 week highs on the S&P. The problems begin in the second half when those same policies start to tighten. At that point, the market mood will likely change."
Personally, I feel we’re in for a very profitable year. As one of the investment directors for the $20 Trillion Report, I feel that the oil markets are in for a wild ride. For the first time in 40 years, the U.S. has managed to increase its oil production, yet there are only a few areas this growth is actually happening. And as we move closer to an economic recovery in 2010, not only have oil prices found a new floor above $60 per barrel, but I think we could easily see oil break into triple-digits. That’s why I believe the next wave of investments will come from the trillions of dollars that will be spent developing these new oil plays.
My colleague Chris Nelder echoed a similar sentiment, saying, "Agricultural commodities will be hot. Climate change is putting millions at risk of starvation in East Africa and disrupting food production in much of the rest of the world, but God isn’t making any more farmland. Gold will continue to be strong as the world tries to print its way out of depression. Energy will continue to outperform. Coal, natural gas, uranium, solar, wind, and probably next-generation biofuels will all be buys for 2010."
Of course, we can’t forget the surging green markets. I asked my colleagues, Jeff Siegel and Nick Hodge, to weigh in on the upcoming trends in renewable and alternative energy.
According to Jeff Siegel, founder of Green Chip Stocks, "Despite continued market uncertainty in 2010, the energy crisis that is upon us will continue to breed new opportunities in renewable energy… "
That’s why Jeff believes there will be several big winners to come out of 2010. Here’s what Jeff’s watching: Chinese solar manufacturers with close relationships to the Chinese government and U.S. manufacturing… Domestic geothermal companies with operational power plants and direct ties to DOE loan programs… Smart grid developers that have built strong relationships with the utilities over the past couple of years… High-performance battery manufacturers supplying batteries for electric cars and utility-scale generation projects… Chinese wind turbine manufacturers with strong U.S. presence… And domestic wind farm developers sending power to the California grid.
He quickly adds, "In fact, there’s one wind farm developer in particular that I believe will really start to take off on January 1 — when California’s new renewable energy standard goes into effect. The company’s next project is generating revenue, and operates without a single penny of debt!"
And speaking of the smart grid, Nick Hodge, editor of Alternative Energy Speculator, told me yesterday, "The best bet is on the smart grid — and all it encompasses — which will be a sure thing in 2010. Energy-producing technologies like wind and solar have come-of-age in a big way, but lack the necessary infrastructure to make them a real game-changer. Because it reduces demand through efficiency and increases supply through transmission and smart devices — while requiring less capital — billions of dollars will be changing hands as electric infrastructure undergoes a major upgrade. As that happens, I’ll be picking-off winner after winner for my readers."
Green Chip International editor Sam Hopkins said recently, "In 2010, one of two things will happen on the global clean energy scene: one, the competitive environment will heat up as hundreds of new companies push homegrown green power technology; or two, current major players will hang onto market share and ramp up their own R&D. In either case, Green Chip International readers will have a bead on where in the world the best renewable fuel and cleantech investments can be found."
Thanks for the input, guys.
Enjoy your weekend,
P.S. In case you missed our top stories from this week’s Energy and Capital or our sister publications, I’ve included them below.
The Bakken’s Second Round of Profits: We Were 100% Wrong About the Bakken
Energy and Capital readers know a thing or two about U.S. oil production. More importantly, they know exactly where oil companies are stealing the spotlight. The problem, however, is that we were 100% wrong about the Bakken. It turns out the hottest oil play in the U.S. just got even better…
The Outlook for Oil Prices in 2010: Don’t Expect Lower Oil Prices for Much Longer
Energy and Capital Editor Keith Kohl offers his outlook on where the oil markets are headed in 2010. Those of you expecting to see crude prices fall may be in for a surprise.
Greenland’s Gift: The Chunk of Arctic Tundra Worth $273 Billion
In two weeks, this country is about to give up its rights to a small piece of Arctic land that insiders are hailing for its rich deposit of rare earth elements. These "technology metals" are crucial to modern technology. Of course, there’s only one play for investors to capitalize on… Energy and Capital reports.
Regenerative Medicine Companies: The Next Big Thing is Closer Than You Think
Wealth Daily‘s Steve Christ sheds light on this growing trend in biotech, highlighting several investments about to break wide open for his readers.
NYSE USO Oil ETF: Playing NYSE: USO vs. the "Dollar-Obsessed" Oil Market
International Editor Sam Hopkins gives readers his technical analysis of this oil ETF, explaining why investors can look beyond the oil market’s obsession with the U.S. dollar.
How Flexible Spending Accounts Push Drugstore.com Stock: Use it or Lose it… by December 31
Wealth Daily Editor Ian Cooper focuses his attention on the rules behind flexible spending accounts. His research points to one stock that offers his readers an opportunity to profit. Of course, that investment window is quickly closing.
Exxon Goes Unconventional, Gobbles Up XTO Energy: Major Move Endorses the Big Shale Plays
Editor Steve Christ weighs in on the latest acquisition of XTO by Exxon. The move has thrust Exxon into the burgeoning shale gas plays. Did Exxon make the right choice?