I wasn't more than 30 minutes outside of D.C. the other night before my cell phone started ringing.
The calls involved breaking new developments overseas that promise to have a big impact on the global energy markets. They concerned a major global energy situation that is likely to create a domino effect that will have consequences for U.S. domestic policy.
The Next Best Investments in Oil Come From This Texas Sweet Spot
As I wrote up this analysis of the best investments in oil, a familiar saying came to mind: "Everything old is new again."
A truer statement could not be said about the Permian Basin, which is a geological formation roughly 300 miles long and 250 miles across that stretches across west Texas and eastern New Mexico.
A Big Time Squeeze for Refineries is About to Begin
After banking some very hefty profits for Energy Advantage and Energy Inner Circle subscribers on refining stocks earlier this year, the entire sector now is about to land "between a rock and a hard place."
Once a high-flying place for investors to earn substantial profits, refiners have been under pressure for the last two months. But that's actually just the beginning of what's to come.
Why the Fed's QE Policy is Bullish for Oil Prices
Recently, I talked about how crude was beginning to occupy a position as a store of market value ("Why Oil Is Becoming the New 'Gold Standard," May 20, 2013). The development has been a direct consequence of the flight from holding gold.
That flight may be tapering and a new floor established for the next major spike by the metal.
The problem is there is no agreement on which direction that move will be...
These days, a sudden improvement in gold prices may only extend as far as hedge funds and institutional investors covering shorts.
Nonetheless, there is an interesting parallel developing between the plight of gold and crude oil prices.
These Oil Stocks Are the Big Winners in This Year's "Summer Pop"
I have been "in the field" for the past several days and will be back in circulation later this week. But I wanted to send you a note on what's been taking place recently.
The last two trading sessions have seen a spike in oil stocks. The rise has been focused on companies that provide services to early-stage field development, as well as for crude production.
Now, we have witnessed a similar "summer pop" in each of the past three years. It tends to signal a rise in expected medium-term demand for both crude oil and oil products.
However this time around, the improvement isn't reflected in companies across the board, but rather in those emphasizing geographically specific field plays.
How to Invest in Oil's Final Frontier: The Arctic
Investors searching for how to invest in oil in 2013 should be focused on these latest developments from the Arctic.
In fact, countries are racing to get a piece of what could be the final frontier for oil...
As ice melts in the Arctic region, oil and gas trapped beneath the water becomes more accessible.
Money Morning Global Energy Strategist Dr. Kent Moors recently explained to Money Morning members about the search for Arctic oil and gas.
He spoke about the years-in-the-making U.S. Geological Survey's Circum-Arctic Resource Appraisal. The study found that 84% of the total undiscovered oil and gas left on the planet is located above the Arctic Circle, mainly offshore and in three huge basins that lie under shallow seas.
Why Oil Is the New "Gold Standard"
Something very interesting just happened at the 2013 MoneyShow in Las Vegas.
The purveyors of doom and gloom were all still hawking their services there. But the primary solution they offer - a cure-all elixir for everything that ails markets - was beginning to wear thin.
The usual conviction that this one asset is the remedy was gone. And the seats at these sessions were only half-filled.
Indeed, gold is beginning to lose its luster.
The erstwhile commodity fix has been under pressure of late as well. Yet, even while most eyes have been on declining commodities - especially gold, silver, and platinum - something else has been happening.
Crude oil is emerging as a new replacement to reflect stored market value.
That is good for folks like us who invest in the energy sector, because it will provide a floor to downward pressures in oil prices. It will not counter all forces reducing the price of oil, but it is likely to temper such movements, allowing us some leverage.
Oil Price Manipulation Awakens Libor, Enron Ghosts
Last July, we warned you that oil prices could potentially be manipulated in similar fashion to the London Interbank Offered Rate (Libor), and now a recent raid of major oil companies highlights this growing danger to the $3.4 trillion-a-year crude market.
The European Commission last week stormed the offices of Royal Dutch Shell PLC (NYSE ADR: RDS.A, RDS.B), BP PLC ( NYSE ADR: BP), and Statoil ASA (NYSE ADR: STO) as part of the ongoing investigation to find out whether companies are manipulating oil prices and, if so, how long it has been going on and the possible ramifications.
"The commission has concerns that the companies may have colluded in reporting distorted prices to a price reporting agency (PRA) to manipulate the published prices for a number of oil and biofuel products," the EC said in a statement.
Besides major oil companies, big banks are active in the energy market and would likely benefit from any manipulation, David Frenk, director of research at the financial reform group Better Markets and a former commodities analyst, told CNN.
The ordeal has brought back memories not only of last year's Libor scandal but also of the actions taken 12 years ago by Enron to control energy prices.
How to Hedge Oil Prices in Volatile Markets
Welcome to the new pricing environment.
We're already started to see kneejerk reactions to short-term indicators last Friday.
A better than expected jobs report sent crude oil prices higher immediately. The figure was encouraging but not a barnburner. Of course, some massive upward revisions for the previous two months hardly hurt either.
Some of this is the result of investors still gun shy after a massive recession. Now we have certainly had a very nice bull market run and the prospects of another meltdown any time soon are negligible.
Nonetheless, the new drivers of oil prices provide little chance for real dynamics to work themselves out. This is all about reaction. Picture it as the newest investor version of smoke and mirrors.
Today's prospects are very good for the oil sector. Natural gas has pulled back from some heavy gains. Major losses earlier this week were erased on Friday. There is a range forming, and it is likely to remain absent any unexpected developments (largely geopolitical at this point).
Demand will increase as we move into the summer; global levels will rise quicker than domestic in the U.S. or Western Europe. That will provide some upward pressure on oil prices.
Remember as well that, while certain region such as the U.S. have a new largess in unconventional (tight or shale) oil, the full volume of that new production will be more expensive to bring on line. That means the additional extraction will not decrease the overall price.
However, the real question is how to make money if trading is in a narrow range for the near term.
You need to develop a new hedging strategy. Here's how...
Frack or Fail: Is It Time For California's Liberals to Go?
Editor's Note: California is in a LOT of trouble financially. Cities are going under and the state can't balance its budget. It also has almost half a trillion in state pensions to fund and revenue is drying up.
But there is one way out: Tap the largest oil and gas play in the Lower 48.
The question is whether this left-leaning state crowded with special interests like the Sierra Club will actually let oil services companies begin to start fracking on state land.
In our inaugural Money Morning Fight Club brawl, Frank Marchant and Garrett Baldwin square off on this contentious issue. The best part is we are asking you to turn in your scorecard and pick the winner at the end.
So let's get ready to rumble...