The Secret Indicator That Points to Much Higher Oil Prices
Crude oil has taken on a life of its own. As I have noted on several occasions, oil is both a commodity in wide demand and a financial asset in its own right.
In the former case, as a commodity, the so-called "wet" barrels (the actual oil) will respond to traditional marketplace pressures - particularly supply and demand.
In the asset role, which involves futures contracts (the "paper" barrels), oil becomes something that can be used as a store of value. As we'll see momentarily, oil's role as a financial asset underpins a crucial new development.
Six catalysts are behind the recent increase in oil prices. Five are well known in the marketplace. But it's the sixth catalyst - not as widely known or understood - that is central to our forecast that oil prices will continue their march.
This sixth catalyst also enabled us to uncover a significant opportunity for you to make a great deal of money.
To find out about those profit plays, please read on... Read More...
Record Breaking Contango Suggests Higher Oil Prices for 2011
ConocoPhillips (NYSE: COP) is paying $41,000 a day to keep a storage tanker capable of holding 3 million barrels of oil floating in the Gulf of Mexico, according to international ship- and offshore broking firm RS Platou. And the TI Europe is just one of hundreds of oil tankers sitting idle in waters around the world, as energy companies and investment banks await higher prices for crude.
Oil prices have fallen precipitously since the spring, as optimism about "green shoots" of economic growth gave way to fears of a double-dip recession. Prices have fallen more than 12% to $75.81 a barrel, from a high of $86.54 a barrel in April.
Indeed, with the U.S. economy stuck in the mire, the global outlook for oil demand has diminished - at least in the near-term. Longer-term, however, traders expect prices to surge higher next year as growth solidifies. That's why contracts for crude set to be delivered six months from now are worth more than crude at its current prices - an anomaly known as "contango."
Investing in Canada: The World's Safest Economy
I've said it once, and I'll doubtless say it a few dozen more times before the U.S. economy returns to health: Just because you have to endure recessionary conditions doesn't mean that your money has to.
That's the argument I make when I urge Americans to search for investments outside U.S. borders. Ironically, your money doesn't have to travel all that far: What's arguably the world's "safest economy" is actually located just north of the border.
I'm talking, of course, about investing in Canada.
For the five ways to profit from Canada, please read on...
Petrobras Sets Long-Term Financing Plan by Selling $42.5 Billion of Stock to Government
Petroleo Brasileiro SA (NYSE ADR: PBR), the Brazilian national oil company better known as Petrobras, announced Wednesday that it had agreed to issue $42.5 billion in new stock to the Brazilian government to obtain the rights to five billion barrels of oil in offshore fields.
Petrobras will pay an average of $8.51 a barrel for the oil after almost two weeks of negotiations with the government, according to a regulatory filing. More than half the oil will come from the Franco field in the offshore Santos Basin, the company said.
Even though the company paid what is seen by many analysts as a premium for the rights, the deal is the linchpin for the Latin American oil giant's long-term financing plans.
Is BP Dealing Away Its Future?
In the aftermath of the biggest environmental disaster in U.S. history, the Gulf of Mexico relief-well saga continues to monopolize our attention.
But here's the reality: Money problems - not the relief wells - could prove to be the undoing of BP PLC (NYSE ADR: BP). And that means the company's fate is most closely tied to its ongoing efforts to raise money by selling key assets from around the world.
BP is looking to divest $30 billion in assets during the next 18 months.Selling its assets is one way for the company to raise the money needed to cover its expected liabilities. But here's the problem: Those sales are moving right into the teeth of a new round of mergers-and-acquisitions (M&A) deals that were already taking place in the oil-and-gas sector, due to rising volatility there and the inability of some to withstand the uncertainty.
As a result of all this wheeling and dealing, the big will get bigger - and BP will get smaller. Indeed, the BP that emerges from the mess that it created should be smaller, leaner and smarter. But will that be good enough?
To understand BP's financial strategy, please read on... Read More...
Cold-Weather Investing: Coal, Natural-Gas and Heating-Oil Investments Will Pack a Punch in January
The irony about cold-weather investing is that the biggest profits come to those who position their money during the hottest months of the year - even during the record heatwave Americans have been experiencing this year.
In short, now's the time to start thinking about such winter-related topics as heating bills, and such cold-weather investments as natural gas, heating oil and coal.
According to the American Petroleum Institute (API), natural gas provides heat for 55% of homes in the United States, followed by electricity, which warms 39%. Heating oil, propane and coal play only minor direct roles, although coal is used to fire 49% of America's electric generating plants, with another 20% fueled by natural gas.
That means natural gas is the natural choice of investors looking for winter-related profits - although Dr. Kent Moors, editor of Oil & Energy Investor newsletter and a frequent contributor to Money Morning, cautions that factors other than routine home-heating demand play a major role in setting prices.
South Korea Moves on U.K. Energy Assets as Competition with China Increases
Korea National Oil Corp. (KNOC) on Friday made a hostile bid for the United Kingdom's Dana Petroleum PLC, marking the first time a state-owned Asian company has gone directly to shareholders.
The move underscores South Korea's determination to double its oil output by 2012 and increase its energy security. It also shows that South Korea will not be denied energy assets, despite being outbid by Chinese companies in several instances.
KNOC took the $2.9 billion (1.87 billion pound) bid to Dana's shareholders after the oil explorer rejected KNOC's previous offer of 1,800 pence a share offer. In a filing with the London Stock Exchange, KNOC said it had support from 48.62% of shareholders, putting the needed 50% approval target within close reach.
This China Province Will Become a Global Oil-and-Gas Market Powerhouse
Like everything else, the balance of power in the global energy market is shifting toward China, where a little-known province is perfectly situated to become a global oil-and-gas market powerhouse.
Nestled in the far northwest of China, Xinjiang is the country's largest province and the primary domestic source for oil and gas. It is sparsely populated and as big as Western Europe. The name, Xinjiang, literally means "New Frontier." And recent decisions in Beijing are going to give that translation even more meaning - transforming this province into a "new frontier" for the global energy sector.
To understand how to profit from this development, please read on... Read More...
Crude Oil Prices Tumble as IEA Warns Economic Woes Could Stunt Demand
Oil prices yesterday (Wednesday) fell below $80 a barrel after the International Energy Agency (IEA) warned that demand could be curtailed if global economic growth is weaker than expected.
The warning came even as the IEA, an energy adviser to 28 industrialized countries, slightly increased forecasts for global crude demand for this year and 2011.
However, those projections were based on revisions to historical oil-demand data and on forecasts issued by the International Monetary Fund (IMF) nearly four weeks ago. Since that time, economic news in the United has become gloomier.
The U.S. Federal Reserve said after its policy meeting on Tuesday that the pace of economic recovery had slowed in recent months and was expected to be "more modest in the near term" than previously thought.
Gasoline-Price Forecasting: What Sam the Gas Station Owner Knows That We Don't
What started out as a routine fill-up at the service station that I frequent has turned into a solid gasoline-price-forecasting model that should spotlight the most-imminent profit opportunities.
Of course, it wouldn't have happened without Sam.
Sam runs a gasoline station 12 miles from my house, in a little, out-of-the-way, suburban town. We have formed a friendship, of sorts, through the years. He's one of the few people I run into on a regular basis who does not ask me where gasoline prices are headed.
He already knows.
To find out how Sam's pricing prescience can mean profits for you, please read on... Read More...
Why You Should Worry About the Iran Oil Sanctions
I cut my teeth doing energy-related deals in the Soviet Union and still spend a lot of time consulting in Russia and the Caspian Sea basin. These days, my work takes me all over the globe. But the part of the world where my career began still holds the key for future oil supplies.
Especially the Caspian.
This land-locked body of water borders five countries, each having major oil-and-gas reserves.
One of those countries is Iran - the focus of the latest problem that's cropped up in the global energy sector.
And that "problem" - Iran oil sanctions - is certain to bring about an increase in the price of crude oil.
Two sanction-spawned catalysts will boost oil prices. To see them, read on... Read More...
Money Morning Mailbag: Relief Wells Near Finish, But Oil Spill Blame Game Continues
While BP PLC (NYSE ADR: BP) closed in this week on finishing relief wells to permanently plug the oil spill, stormy weather threatened to delay the final steps as clean up crews were called in to shore.
BP capped the blown-out Macondo well last week and has been conducting pressure tests to ensure the cap's strength. A relief well is close to completion but work has been halted until the storm passes. All work could be stopped for 10 - 14 days if the area is evacuated.
While the leak may finally be close to plugged, the financial aftermath is far from over. Corporate entities and the U.S. government continue to point fingers at each other.
"A New Age in the History of Energy" as China Tops the U.S. in Consumption
China, powered by years of surging economic growth, is now the world's largest energy consumer, bumping the United States from the top spot for the first time in more than a century, according to new data from the International Energy Agency (IEA).
China consumed 2.25 billion tons of oil equivalent last year, or about 4% more than the United States, which burned through 2.17 billion tons of oil equivalent. China's total energy consumption was just half that of the United States a decade ago.
"The fact that China overtook the U.S. as the world's largest energy consumer symbolizes the start of a new age in the history of energy," IEA chief economist Fatih Birol told The Wall Street Journal. The United States had been the world's biggest overall energy consumer since the early 1900s, he said.
China was expected to become the biggest energy consumer in 2015, but the economic meltdown and green energy programs in the United States accelerated the transition, Birol said.
Breaking Down the British Giant: Who Will Buy BP's Best Assets?
There's no question that some of BP PLC (NYSE ARD: BP)'s assets are on the block.
The company said Monday that the total cost of the Gulf oil spill had already risen to $3.5 billion. And while it's too early to estimate the final costs associated with the spill, analysts have pegged the tab at $20 billion to $40 billion. Some even believe the total cost could come in near $100 billion.
BP has already paid $165 million to settle individual claims and agreed to set up a $20 billion escrow fund to absorb further damages. It's also suspended its dividend to conserve cash.
But that's not enough. With costs soaring, BP said in June that it is looking to raise at least $10 billion through asset sales in the next 12 months. With that the run on BP's assets commenced.
The BP Relief Wells … And the Two Nightmare Scenarios to Fear
Although the global energy sector is entering its most-promising stretch in decades - with more new technologies and more investment opportunities than ever before - I just can't seem to get away from BP PLC (NYSE ADR: BP) and its problems.
Take last Thursday, for instance. I began the day at FOX Business News, where the interviewer wanted me to explain what will happen if the BP relief wells fail. Then I spent an hour as the guest on a radio talk show from Johannesburg, South Africa, detailing what options are available to BP. Later still, I served as a consultant to a Wall Street investment crew - via conference call - once again on the status of the BP relief wells.
The BP relief wells are right now the dominant topic on everyone's mind. But there are two potential scenarios - of "nightmare proportions" - that investors need to know about.
Let me explain...
To understand the possible nightmares that BP faces in the months to come, please read on... Read More...