Oil

Investment News Briefs

Former McKinsey Director Pleads Guilty in Galleon Scandal; Unemployment Claims Drop; EPA Tightens Ozone Standards; Cold Snap Threatens Natural Gas Production; State Tax Collections Plummet; Oil Slides From a 15-month High

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Investment News Briefs

With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.

Total Forms Joint Venture with Chesapeake; Manufacturing Index Jumps; Cold Snap Drives Oil Higher; Car Sales Surge in December; Kraft Advances Bid for Cadbury; New BofA CEO Optimistic for U.S. This Year, But Krugman Shows Caution; WSJ: Banned Chinese Companies Continued to Do Business With U.S. Firms

  • Total SA (NYSE ADR: TOT) will pay up to $2.25 billion for a 25% stake in Chesapeake Energy Corp.'s (NYSE: CHK) assets in the Barnett Shale natural gas field in North Texas, Total said yesterday (Monday). Total will pay $800 million for the stake, and up to $1.45 billion for as long as six years by funding 60% of Chesapeake's costs in the field. The Barnett Shale field is the biggest producer of natural gas in the United States and accounted for 52% of Chesapeake's third-quarter output.

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Investment News Briefs

With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.

Fannie, Freddie Get Blank Checks; Holiday Retail Sales Rise 3.6%; Fed to Banks: Set Up CDs with Us; Health Care Bill Likely to Resemble Senate Version; JPMorgan Sues Former Bank Exec; Oil Tops $79 for First Time in Four Weeks

  • In what's been called a "perplexing" move by one analyst, the U.S. Treasury lifted a $200 billion cap on the amount of taxpayer dollars that can be injected into ailing mortgage firms Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) , providing unlimited support to them. The Treasury put into $60 billion into Fannie and $51 billion into Freddie, and were unlikely to need more than the $200 billion cap, wrote Keefe, Bruyette & Woods Inc. analyst Bose George in a note to investors yesterday (Monday). George views the Treasury's move as a way to more aggressively prop the U.S. housing market, and said the government could step up efforts of its Home Affordable Modification Program (HAMP), a mortgage-modification program designed for homeowners who can no longer afford them. But so far, HAMP and other government props have failed to stop a continuing wave of foreclosures, as Money Morning reported last fall. Shares of the firms, both government-sponsored enterprises (GSE) skyrocketed in trading yesterday. Fannie was up 20.95% to close at $1.27, while Freddie gained 26.98% to close at $1.60.

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How to Profit From the Oil-Price Spike of 2010

Oil prices staged a remarkable rally this year on the back of a weak dollar and a nascent economic recovery. In 2010, it's likely that these same factors will combine with an increase in global energy demand to push oil prices back up over $100 a barrel.

With stockpiles still high and energy demand rebounding sluggishly, most forecasts are calling for the "black gold" to edge up into the low-triple-digit price range. That's 40% higher than where oil is trading right now - but is still well below the record high of nearly $150 a barrel that was established in 2008.

Money Morning Chief Investment Strategist Keith Fitz-Gerald is even more bullish. He believes that a price of $100 a barrel is "easily attainable" and says that some sort of unforeseen market shock could cause crude oil to spike as high as $150 barrel by the end of 2010.

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New "Profit Routes" Emerge in Oil – Reporting from Moscow

MOSCOW - Sergei Kudryashov likes pizza, poker and American jazz. He's also deputy head of the Russian Ministry of Energy (Minenergo) and former VP at NK Rosneft OAO (LSE: ROSN), the No. 1 state-controlled oil producer.

I've known Sergei for almost two decades now. We compare notes whenever I'm in Moscow. This time, I briefed his team on key developments in the international oil markets. And, as usual, I came away from the meetings with some incredibly valuable information - information the public simply can't get on its own.

So let me share what I've just learned. It's a tremendous opportunity to profit from Russian oil - without investing a dime in the country itself. Indeed, as you'll see in a minute, there are several ways to make money right here at home.

First, here's what's going on.

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If U.S. Oil Companies Aren't Winning Bids in Iraq, Who Is?

Iraq has auctioned off more proven oil reserves in the past six months than are collectively held by the United States, Mexico, and the United Kingdom.

But U.S. oil companies have signed surprisingly few development contracts – and foreign rivals have swooped in to scoop up major deals.

Take last weekend, when Iraq wrapped up the biggest oil-field auction in history. Major new deals were announced by Europe's Royal Dutch Shell PLC (NYSE: RDS.A , RDS.B), OAO Gazprom (OTC ADR: OGZPY), Lukoil (OTC ADR: LUKOY), China's China National Petroleum Corp. (CNPC), and Malaysia's Petroliam Nasional Berhad (Petronas).

The U.S. oil majors – ExxonMobil Corp. (NYSE: XOM), ConocoPhillips (NYSE: COP) and Chevron Corp. (NYSE: CVX) – were nowhere to be seen.

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Exxon Deal For XTO Energy May Set Off Wave of Energy Mergers and Acquisitions

In a deal that may set off a wave of mergers and acquisition (M&A) activity in the energy sector, Exxon Mobil Corp. (NYSE: XOM), the biggest U.S. oil company, agreed to buy XTO Energy Inc. (NYSE: XTO), the largest U.S. natural gas producer, in an all-stock deal valued at $31 billion.

Exxon, which hasn't made a major acquisition since it bought Mobil ten years ago, is taking advantage of the low gas prices pressuring smaller, debt-laden gas exploration companies. The economic downturn and discoveries of vast pools of North American natural gas have kept a lid on gas prices, leaving companies in the industry strapped for operating cash.

The deal announced yesterday (Monday) values XTO at $51.69 a share, 25% higher than Friday's closing price. XTO holders will get 0.7098 share of Exxon for each share of XTO. The Texas-based oil giant will also assume $10 billion in debt.

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Why Russia's Oil Fields Will Soon Be Crawling with Westerners

Western oil majors are about to help Moscow solve its energy problem. And that could be a boon for investors.

The traditional Russian oil fields in Western Siberia are well past peak production. Some satellite fields in the region remain, but the extraction gains will be marginal.

My sources in Russia's Ministry of Natural Resources and Ecology (MNRE), the government entity responsible for distribution and oversight of development leases, now acknowledge that the country's overall crude oil production could decline by more than 7% over the next several years.

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Three Reasons Commodities Prices Will Continue to Soar in the New Year

[Editor's Note: This report on commodities is part of our "Outlook 2010" series, which chronicles the global-investing outlook for the new year.]

In a Money Morning column last December, I predicted that "commodities may be due for a recovery in 2009." It's always nice to be right, but I have to say the move in some commodities has surprised me. Just look at the performance figures for the 12-month period that ended in mid-November.

When it comes to commodities, most of 2010 will be a reasonably close repeat of 2009. You may think that sounds dull - until you look at the accompanying chart (see chart below) and realize just how much more there is to go.

Although the rally started at an admittedly low point in January, by mid-November it was very clear that commodities were once again in a major bull market. A few commodities have been left out - coal, natural gas and many foodstuffs have experienced lackluster performance - but many of the others (such as the metals, in particular) have had an exceptional year.

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Investment News Briefs

More AIG Execs Threaten to Quit Over Pay; Bernanke Not Raising Rates Anytime Soon; Gold, Oil Fall After Fed Comments; October Consumer Credit Falls Less Than Expected; SEC Charges Former New Century Execs with Fraud; Cadbury to Respond to Kraft Bid Next Week; BlackRock Plans First Debt Offering in Two Years; Commercial Loan Delinquencies at Record High; RIM's BlackBerry to Get Wider Reach in China

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Was Friday's Trading the First Sign of a Carry Trade Reversal?

Although it's too early to know for sure, Friday's action suggests we could be seeing the earliest stages of a carry trade reversal. Remember that hedge funds and other highly leveraged institutional investors have been borrowing here in the United States at ultra-low interest rates, selling the dollar short, and using the proceeds to snap up stocks, bonds, and gold.

Stocks rocked and rolled on Friday as traders reacted to a better-than-expected jobs report for November. Payrolls dropped just 11,000 and the unemployment rate fell to 10%. The consensus was expecting a payroll drop of 100,000 and the unemployment to remain at 10.2%. Sure, employers still made cuts. But by all indications were on the cusp of a job market turnaround.

An initial early morning blast took small cap stocks up as much as 3% before sellers emerged. The main concern was that a strong economy will force the U.S. Federal Reserve to drop its easy money policy that has it purchasing some $3 billion in mortgage-backed securities (MBS) per day while keeping short-term interest rates pegged near zero. The futures market now pegs the probability of an interest rate increase by August 2010 at 100%.

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Investment News Briefs

AOL to Cut One-Third of Workforce; Geithner Rebuffs Calls for Resignation; Oil Follows Equities' Decline; Leading Indicators Hit Two-Year High; U.S. Making Plans for New Iran Sanctions; DirecTV Won't Rule Out Possible Takeover;

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Trade Gap Unexpectedly Widens on Surge of Oil and Auto Parts Imports

The trade deficit in the U.S. grew by an unexpectedly large 18.2% in September, the most in a decade, reflecting rising demand for imported oil and imports from China.

The gap grew to $36.5 billion, the highest level since January, from a revised $30.8 billion in August, the Commerce Department said today (Friday). Imports jumped the most in 16 years, overcoming a gain in exports.

U.S. exports and imports were at the highest levels since December 2008, in a sign that the U.S. economy is recovering. Imports grew 5.8% in September, the biggest monthly gain since March 1993, while exports rose 2.9%.

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Three Ways to Profit From Rising Oil Prices

An explosion in the world money supply and the rapidly growing auto markets of China and India have fueled an incredible bull run in oil prices. And, it looks like oil still has a long climb ahead. This report will show you three ways to profit from the bull in oil prices.

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A Money Morning Interview: The Future of Energy

Renowned Oil Expert Dr. Kent Moors Details Shortages of Oil, the Impact of Higher Prices, the Promise of New Technologies and the Opportunities For Investors Dr. Kent Moors is one of the world's foremost experts on oil, energy policy, finance, risk management and new technologies. Moors advises the leaders of six oil-producing countries, including the […]

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