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Oil's 10-Day Price Rally

Keith Kohl

Written By Keith Kohl

Posted January 9, 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.

If you’re like us, you’ve been smiling all week as energy stocks across the board rallied higher. Up until Thursday, when crude prices fell $0.52 to close at $82.66 per barrel, oil was on a 10-session hot streak.

After reaching as high as $83.47 per barrel on Friday, the question for crude is whether or not it will find support. That’s been the story for the last six months. Since the end of summer 2009, we’ve watched oil contracts stubbornly trade between $70 and $80 per barrel. No matter how bullish the news was, oil has failed to stay above $82 for long — which makes this week’s rally even more important.

And even though we’re not getting our hopes up for a run to triple-digits, the long-term outlook for oil and natural gas prices has some companies looking forward.

  • China’s certainly betting big on oil. As you know, they’ve been taking advantage of cheap prices by picking up billions of dollars in overseas assets. Lately, they made a $1.9 billion bid to buy a stake in two oil sands projects.

  • Closer to home, companies like Exxon are also making a play for unconventional assets. Their latest deal with XTO Energy gives the company a major stake in the emerging shale gas market. However, opposition for developing these shale formations continues to grow. Hydraulic fracturing, the process used to crack the underground shales has come under fire recently.

  • Yesterday, Baker Hughes announced an increase in the U.S. rig count increased by 65 rigs to 1,172 in December, 2009. Across the world, the overall rig count was up 100 to 2,509. Even though we’re still a far cry from 2008’s record numbers, we can’t ignore the increased activity.

  • One thing I’ve been telling readers for years is that cheap oil is gone for good. It took a massive global recession to knockdown record oil prices. And if you need proof, look no further than the lengths to which oil companies must go to find it. Back in September, a new record was set as the deepest offshore well to date was drilled in the Gulf of Mexico.

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, you can find them below.

Energy Efficiency: The Fifth Fuel
Energy and Capital Editor Nick Hodge offers a fresh look at energy efficiency after examining his own personal energy consumption.

The Bakken Mistake: Being Wrong About the Bakken is Making Us a Fortune
When was the last time you felt so good about being wrong? For Energy and Capital readers, this mistake has pulled in gains of 350%! Take a minute to read this special Bakken report to find one stock that’s just starting to heat up.

The Marcellus Shale Formation: Is a Drilling Ban Going to Happen?
Energy and Capital Editor Keith Kohl takes a closer look at why New York officials are trying to shut down shale gas operations for good. Find out how it’ll affect your next natural gas stock pick.

Greenland’s Gift: A Chunk of Arctic Tundra with a $273 Billion Secret
Energy and Capital readers get an insider look into Greenland’s $273 billion secret. Just one week ago, Denmark lost control of this billion dollar secret, giving one company the chance to take over.

China Magnesium Stock: China is Buying the Minerals of the World
Editor Christian A. DeHaemer explains why China is sucking up minerals all over the world. The only question now for investors is how to take advantage of this growing trend…

Investing in U.S. Gold Stocks: Looking for Gold? The West is the Best
Wealth Daily Editor Luke Burgess shows readers where to find the best gold investments in today’s market. Here’s a hint: you may not have to look further than your own backyard.

Home Builders Stocks Are No Bargain: Five Home Builders to Avoid
Editor Steve Christ warns investors about the false bottom being called in the housing market and highlights five stocks to avoid at all costs.

eReader Wars: Kindle vs. Nook: Amazon Investors May be Celebrating Too Early
Wealth Daily Editor Adam Sharp compares two of the latest combatants in the war for eReaders: The Kindle and the Nook. Follow Adam’s take on the situation as he puts to rest this battle over one of 2010’s hottest trends.

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