How To Play the Oil Conspiracy Theories

Tony Daltorio, Investment U Research

Despite the world’s economic growth woes this year and consequent decreased energy demand in the U.S., the price of oil has held up pretty well this year ($77 as of November 3) when you’d actually think that it would be lower.

What gives?

Fundamentalists will point to two factors…

Continued strong demand for oil from emerging markets. Decreasing oil output from non-OPEC producing nations such as Russia and Mexico.

Conspiracy theorists on the other hand, scoff at that notion. They blame it on the huge quantities that greedy oil companies hold offshore for no better reason than to increase their profits.

While I largely consider myself a fundamentalist, I decided to check it out, just in case there were any facts to support the complaints. And it first means asking a simple question…

Why would anyone

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In the midst of the 1990s bull market, one lone regulator warned about derivatives’ dangers - and overnight became the enemy of some of the most powerful people in Washington …

In The Warning, veteran Frontline producer Michael Kirk unearths the hidden history of the nation’s worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

“I didn’t know Brooksley Born,” says former SEC Chairman Arthur Levitt, a member of President Clinton’s powerful Working Group on Financial Markets. “I was told that she was irascible, difficult, stubborn, unreasonable.” Levitt explains how the other principals of the Working Group - former Fed Chairman Alan Greenspan and former Treasury Secretary Robert Rubin -

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The equities market is up big so far this summer, but not every stock has followed. Is it time for tanker companies like General Maritime (NYSE:GMR) to catch up?

Not all stocks are in positive territory these days. Even though the major indices have been nearly unstoppable this summer, a handful of companies are watching their Street values drop lower and lower.

There is no debating the world is using less oil these days. With many producers still pumping the thick, black stuff from the ground at pre-collapse levels, inventories are on the rise and storage facilities are screaming, “no mas.”

It is no wonder companies like General Maritime (NYSE:GMR) are forced to endure reduced demand and lower revenues. The world is simply sending less oil across its oceans. For crude tanker companies like General Maritine, a slow economic recovery that includes rising oil prices is bad news.

But some analysts

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Matt Weinschenk of Investment U recommends this oil transporting company as his favorite comeback stock. As oil and shipping prices go up and economic activity starts to increase, this company is likely to profit.

This from Mike:

It’s not the time to try to call a bottom… but it is time to plan for it.

Our favorite leading indicator of economic activity, the Baltic Dry Index, will likely be the first to signal the end of a recession. And it provides a convenient clue to one stock I believe will comeback faster than most others, once the market-wide comeback is underway.

The Baltic Dry measure shipping costs, and therefore shipping activity, and is therefore a great “boots on the ground” measure of what’s going on in the world economy. When costs are up, it benefits shipping companies. My favorite right now is Frontline (NYSE: FRO).

Frontline focuses specifically on

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Frontline (NYSE: FRO): Stock of the Day 

by Matt Weinschenk, Senior Analyst, The White Cap Report 

The First “Turnaround Stock” to Buy When We Hit Bottom

It’s not the time to try to call a bottom… but it is time to plan for it.

Our favorite leading indicator of economic activity, the Baltic Dry Index, will likely be the first to signal the end of a recession. And it provides a convenient clue to one stock I believe will comeback faster than most others, once the market-wide comeback is underway.

The Baltic Dry measure shipping costs, and therefore shipping activity, and is therefore a great “boots on the ground” measure of what’s going on in the world economy. When costs are up, it benefits shipping companies. My favorite right now is Frontline (NYSE: FRO).

Frontline focuses specifically on tanker ships

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More Facts on the New World Oil…

By Matt Weinschenk, Senior Analyst, White Cap Report

You may have read the brief post/article from last week detailing the madness in oil markets and the glaring profit opportunity available to those with means. (If not, read the whole Contango article here.)

Well those with means have heard the call.

Alaric Nightingale at Bloomberg is reporting that Morgan Stanley (NYSE: MS)has hired the supertanker Argenta to store 2 million barrels of oil out at sea for $68,000. A quick “back-of-the-envelope” calculation shows a profit of $10 million in the thirty-one days between today and the March futures expiration.

They’ve got to find new ways to profit, since that whole “investment-banking” didn’t work out.

Meanwhile, Frontline (NYSE: FRO), one of the stocks mentioned in last week’s update, estimates that there are 80 million barrels in floating storage. And as

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Contango: The Most Profitable “Buy-and-Hold” for 2009

by Matt Weinschenk, Senior Analyst, White Cap Report

A different buy-and-hold strategy has become the #1 profit-maker for 2009. And I’m not talking about stocks.

Direct investments in oil, right now, are paying off in spades. And it’s because oil markets are… well, totally screwed up.

Right now, you can buy oil for $36 a barrel. And you can lock in a contract to trade oil in June for $51.30. When futures prices are higher than current prices, it’s a situation called “contango.” Oil markets expect a little bit of contango, but the spreads we’re seeing today are off the charts.

Of course, any time there is a market anomaly this severe, there’s got to be a way to profit. 

The Forbidden Contango

The reason such a large contango is rare is because it’s too easy to profit from it. If you were so

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Baltic Dry Index Floats Shippers

The Baltic Dry Index (BDI) is up over 10% to 711 in the past few weeks. It doesn’t mean much, considering it’s down over 93% for the year. In fact, if you consider this move in terms of this summer’s price high of 11,793 - it’s moved barely half a percent.

But that doesn’t mean you shouldn’t be keeping an eye on the BDI.

The BDI is the price used to determine global shipping rates and prices. Like blood pressure does for humans, BDI measures the flow of goods for the economies of the world. And just like us, excessively low or high readings are bad.

Because it isn’t traded, the BDI cannot be moved artificially. It’s one of the best ways to judge the true health of global trade and our economy. It’s why Louis Basenese has been instructing readers to keep an eye on the

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viastockadvisors:

Track the Editor’s China Picks at:

http://trackthepros.com/categories.php?category_id=1564

“Investing in China is about picking the right segments of the economy and the companies that will make it for the long haul,” notes Neil George. In Personal Finance, the advisor explains, “Our strategy for investing involves sticking to a handful of core strategic areas, where we’ve picked a collection of stocks in key industries.” Here, he looks at some favorite ideas:

“The Chinese economy is large, amounting to approximately $3.6 trillion annually, and it’s expanding at a rate of 10%.

“Industrial production, the heart of the economy, is gaining at a rate of 16.3% a year and is keeping a transforming labor force fully engaged; unemployment is a scant 4%. And retail sales are climbing at a hefty rate of more than 23%.

“All of this comes at a price: Inflation is a biting 7%-plus. Pollution is another economic stressor. The major underpinnings of

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I wrote a guest column for John Maudlin’s weekly newsletter. Here are links to PDF and John’s website. John wrote the following introduction to the article:

Are we in a bull, a bear, or a cowardly lion market? As we will see, the answer can make a huge difference in your investment portfolio. This week I am at my Strategic Investment conference in La Jolla. About four times a year I take a break from writing the letter and bring in a guest writer. This week Thoughts from the Frontline will have the very distinguished analyst and author Vitaliy Katsenelson.
In his recent book, Active Value Investing: Making Money in Range-Bound Markets (Wiley, 2007), he exhorted investors to fasten their seat belts and lower expectations for the next decade or so. He also provided a strategy for improving returns in this environment, what he calls …