Product Not Price

Written By Nick Hodge

Posted February 18, 2012

All the headlines say oil is headed higher.

That’s why I sold this week.

Signs of an American economic recovery, progress on a bailout for Greece, and looming Iranian tensions led crude oil to its biggest weekly price gain so far this year.

It was up over $103 Friday at closing time:

Crude Prices March 2012

In my last Weekend Edition, I told you that we’re actually in for a supply glut this year.

The Energy Information Administration forecasts liquid fuels production to grow by 1.4 million barrels per day this year, while demand is only expected to increase by 1.3 million bpd.

So if we’re in for a glut… why is oil back over $100?

The first and most important reason is that liquid fuels are not all derived from crude oil.

While we’re in for a liquid fuels surplus this year, that total includes natural gas liquids, biodiesel, alcohols, and synthetics made from bitumen in oil sands or kerogen in shales.

The conventional crude supply is still tight.

And when you combine that fact with increased housing starts, fewer applications for unemployment insurance, and the Iran situation, a retail investor — and speculator-fueled price bump — is sure to follow.

You don’t want to be in that group.

You want to be in the group that bought oil two weeks ago and sold it when these guys came running to the trough. That’s what being a smart investor is.

A survey by Bloomberg News this week showed 61% of analysts think oil prices will decline or remain unchanged through February 24th.

You can count me in that group.

All the Iran stuff is baked into the price at this point, and I don’t see oil heading much over $105 anytime soon…

The way to profit from oil right now is from the companies bringing newfound shale supplies to market, not from the commodity’s price.

The rest of this week’s coverage is below.

Call it like you see it,

Nick Hodge
Editor, Energy and Capital


American Oil Shale to Kick Off New Economic Era:
Greatest Economic Impact of Any Human Event
Purely on an economic basis, the widespread recovery of American oil shale will be about 20 times greater than the costliest event in human history…

NASDAQ Is Blowing It Out: How to Invest from 11-Year Highs
But if you read the standard news sites like Yahoo finance, or Bloomberg you will find zero articles about it. The NASDAQ is hitting eleven year highs with the next resistance level at 3,497 – and nobody seems to have noticed.

Natural Gas Hype: Treehugging Socialists Fan Flames of Misinformation
Even treehugging socialists know that the domestic oil and gas boom can make you rich.

It’s a New Bull Market, Baby: Everything Is Going Up
Why what’s happening right now in the biotechnology sector is an eye-opener.

Horn River Basin in British Columbia: Unconventional Control Over China
Several Canadian gas companies are taking advantage of China’s unquenchable thirst for energy…

Middle East Oil Sanctions Could Trigger War: End Game for Ahmadinejad
The former dictator of Libya suggested switching to the gold dinar from the dollar for its oil trade. He was shot in the head by a guy wearing a Yankees cap.

The R-4 Trigger Trading System: 3 Signs of a Change in Direction
Analyst Ian Cooper explains how to use one of the easiest trading strategies ever developed, and offers several recent success stories.

Is British Columbia the New Bakken?: Will Export LNG to Asia
In the northeast corner of British Columbia, near the border with Alberta, another North American energy story is taking shape. And just as with the others, the first in stand to make the most.

Prices at the Pump to Reach $4 by Summer: Rising Crude Oil Prices Mixed with Seasonal Fluctuations in Demand to Make Gas Prices Skyrocket
As the national average hits record highs early on in the year, expect to see gas prices approaching upwards of $4 a gallon by June.

An Energy Deal Worth Trillions: Taking a Page from Rockefeller’s Book
Four energy companies are taking a page from the Rockefeller’s book on wealth… and preparing to corner the market in future LNG exports.

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Hydrogen Fuel Cells: The Downfall of Tesla?

Lithium has been the front-runner in the battery technology market for years, but that is all coming to an end. Elon Musk is against them, but Jeff Bezos is investing heavily in them. Hydrogen Fuel Cells will turn the battery market upside down and we've discovered a tiny company that is going to make it happen...

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