A ‘Once Only’ Chance to Bag Major Oil Profits
Source: http://feeds.feedburner.com/~r/ContrarianProfits/~3/420550277/6134Posted on Tuesday, October 14th, 2008 | In Market Commentary
Oil was given a lift yesterday. But at $81.19 a barrel, the black goo is still almost $70 from its July peak.
Greg Guenthner isn’t sweating it.
Oil prices have been caught up in widespread panic selling of recent months. It remains a scarce and essential commodity. This means it is only heading in one direction over the long term.
Greg recommends following oil guru Richard Rainwater’s cue and buying into oil stocks with both hands.
This from Penny Sleuth:
When the markets go to hell, it’s all too easy to become caught up in the moment. Fear is a powerful emotion. We all witnessed this firsthand as the market’s decline accelerated. As the markets continue to crumble, many investors lose sight of their goals. They sell positions indiscriminately; they become irrational.
The sell-off we’re experiencing right now is global. And aside from some safe-haven gold buying, no stock or commodity has avoided the bears. That’s why we’re looking at a scarce and valuable resource for steady long-term gains: oil.
One energy guru has recently made a big bet on oil.
He bought back shares of Exxon (NYSE:XOM), ConocoPhillips (NYSE:COP), Pioneer Natural Resources (NYSE:PXD), BP (NYSE:BP) and Statoil (NYSE:STO) — all at rock-bottom prices. We say he bought these shares back because, in a prescient move, this sage sold off every oil stock he owned in May…back when oil was sitting atop $129 per barrel.
A Fresh Oil Investment
Richard Rainwater knew he would be a bit early to the party — and probably miss the top — when he sold his oil investments back in spring. But with a stellar track record including massive gains betting on everything from hospitals to cell phones, he knew gains from his $300 million invested in oil stocks and futures were in jeopardy.
“I just felt that America was not ready for $4 gas and we would see a pause here,” he told Time magazine in June.
Rainwater pulled his billions in profits just before oil’s peak in July. Now, he’s ready to do it all over again, spreading his millions across Exxon, ConocoPhillips and other big-name petroleum pushers.
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Oil at $150 per barrel and gasoline at $8 a gallon or more…
The oil is running out. It’s as simple as that.
But that’s not what you hear from so-called experts. If you ask government officials, our intelligence agencies and even powerful Wall Street financiers, they tell you the opposite.
They say the Saudis could quickly double their oil production from the current level if they wanted to. And given a few years, they think the Saudis could produce four times as much oil as they do now.
They are dead wrong. Check it out here…
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Overwhelming Demand Will Prop Oil Prices
Rainwater’s outlook is simple: Increased worldwide demand will continue to push the oil price up in the long term. Rainwater’s not alone, either. Analysts and industry experts — like oil tycoon T. Boone Pickens and OPEC President Chakib Khelil — have been making it perfectly clear…oil’s on the rise again.
On July 11, 2008, oil made a record ascent to $147.27 — a 123% jump in only 12 months. With oil sitting around $80 right now, oil aficionados like Pickens are bracing for the run-up to come. “The Saudis claim they have more oil; they don’t. The president wasted his time to go to Saudi Arabia, to say, ‘Give us more oil.’ They can’t give any more oil…they’re stacking up the money as fast as they can stack it up,” warned Pickens in an interview with CNBC.
The allure of oil is hard to refute.
With finite supplies and unquenchable demand, it’s clear why many investment houses put oil above $200 in the near future.
According to Pickens, it’s just a case of an oil-hungry economy overwhelming producers: “Eighty-five million barrels of oil a day is all the world can produce, and the demand is 87 million. It’s just that simple. It doesn’t have anything to do with the value of the dollar.”
Now is the time to buy oil. The third quarter of 2008 saw the largest drop in oil prices in 17 years.
Now with OPEC slashing its production outlook for the rest of 2008 and 2009, it’s unclear just how long prices will be able to stay under $100.
Source: Prevailing in the Midst of Paranoia
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