The wrapping paper has been thrown out, the leftovers picked through and now we’re back for another 3-day work week. I could get used to this schedule!
But seriously, I hope all Daily Profit readers enjoyed a wonderful and safe holiday.
*****The Dow Industrial Average made its highest close over 10,500 yet. And it looks as though we’ll see an even higher close before 2009 is over.
Perhaps even more importantly, oil prices have rallied and are pushing to new highs for the year. It’s no coincidence that stocks and oil move in tandem. This is because they both respond to economic growth expectations. And really, oil may even be more sensitive to economic growth than stocks.
That’s because traders know that oil supply has a hard ceiling. And as demand improves, that ceiling looms. Early news reports this morning are looking ahead to inventory data later this week as a catalyst to push oil prices above $80 a barrel. But really, a move above $80 is inevitable, whether it comes this week or next…
*****Russia is once again holding Eastern Europe hostage to its oil supply, threatening to cut off oil shipments if transportation conflicts aren’t resolved.
This is important news, and not just for Eastern Europe. State controlled oil supplies are leverage for countries like Russia, Brazil, Mexico and even OPEC. Don’t be surprised at all to see these countries withhold oil to drive prices higher.
After all, these countries (with the possible exception of Brazil) are dependent on oil to fund government spending. They absolutely will maneuver to keep prices high and supplies tight. And that becomes even more significant when you realize that supplies in countries like Mexico and Russia are falling. It’s imperative that these countries get the most they can for their oil because it won’t be long before they have no oil to sell. Mexico, for instance, could shut off oil exports in the next 2 years.
While OPEC in general is willing to keep supply steady, we must ask – what about OPEC members like Venezuela and Nigeria? Venezuela’s wing-nut leader Chavez has severely damaged his country’s ability to produce oil by kicking out Big Oil companies. And the fact that OPEC in general refuses to cut supply even as inventories grow suggests they can’t afford to impact their income from oil sales.
*****Fortunately, the #1 oil supplier to the U.S. is Canada. That’s important for political reasons because Canada is what I call a "free-market oil supplier." That means its oil is in the hands of private oil companies and not controlled by the state. Even more importantly, much of Canada’s supply is oil sands that are within its virtually autonomous provinces like Alberta.
Canada’s central government has essentially no control over oil exports. And that means Canada’s vast oil sands reserves are a stable supply for the U.S. It also means that individual investors have a reliable way to profit from higher oil prices without the threat of political intervention.
I’ve just recommended a small oil sands exploration company to my Energy World Profits readers. This small $1.16 stock holds the rights to 685,000 acres in Saskatchewan, right next to Alberta’s famed oils sands region. Early tests suggest this land holds between 10 billion and 60 billion barrels of oil. That means this $1.16 stock could easily move as high as $8 or $10 a share.
*****Over the weekend, I offered a Special Subscription Offer good for 50% off an annual subscription to Energy World Profits. I’ve decided to extend that offer through today…
The world is transitioning to higher oil prices and falling supply. It’s going to be a painful process for some, and wildly profitable for others. That’s why I’ve launched Energy World Profits with oil analyst Gregor MacDonald. Gregor is a seasoned expert on the energy patch and a leading voice on the transition to higher oil prices and the emergence of alternative energy supplies like natural gas, and even wind and solar.
If you’re ready to profit from the changing dynamics of the world’s energy use – and claim a 50% discount – plus get the details on the $1.16 oil sands stock I’m recommending, then here’s the link to Energy World Profits. Check it out today, the 50% discount expires at midnight tonight.