Is Oil Ready to Skyrocket?

by Jason Simpkins Associate Editor, Money Morning

Editor’s Note: Oil has been in the news a lot recently, from its roller-coaster movements, to the international issues. Russia and Israel are both helping OPEC bring prices back up. And if 2008 is any indication, oil might be ready for another climb. Our colleagues over at Money Morning think that might only be the tip of the iceberg.

Oil Prices Could be Ready to Rally if History is Any Indication

Last year’s 54% drop in oil prices may have set the table for a rally similar to the one experienced in 1999, when prices doubled after a similar decline.

The so-called “forward curve of futures contracts” traded on the New York Mercantile Exchange suggests prices will rise 28% this year, according to Bloomberg News.

The current curve looks almost the same as it did 10 years ago, when Russia’s

...

Last year’s 54% drop in oil prices may have set the table for a rally similar to the one experienced in 1999, when prices doubled after a similar decline. The so-called “forward curve of futures contracts” traded on the New York Mercantile Exchange suggests prices will rise 28% this year, according to Bloomberg News.

The current curve looks almost the same as it did 10 years ago, when Russia’s default drove oil prices to drop as low as $10.82 a barrel in late December 1998 - a decline of nearly 40% from where they began that year.

At that time, the Organization of Petroleum Exporting Countries (OPEC) responded by cutting output by 1.71 million barrels per day (bpd), an amount equal to 7% of the group’s total supply, setting the stage for a 1999 rally in which prices more than doubled.

Fast forward to the present.

...

It seems everyone is turning against US Treasuries now. But Justice Litle says it might not be the best move. After a vicious fall at the start of the year, investors could flock back to Treasuries as the recent rally in stocks subsides. Justice says the arguments for shorting the dollar are far more convincing right now.

This from Taipan Daily:

Has the U.S. Treasury bubble popped? It’s starting to look that way.

USTs gapped higher in mid-December, traded in a quiet range til year’s end, and then immediately went into freefall with the start of the new year.

This wasn’t a total surprise. On Dec. 23rd, in a Taipan Daily piece titled “A Treasury Bond Mystery and a Currency Clue,” I gave a summation of what was happening and how to play it:

Based on

...

Axial Vector™ Energy Corporation owns, develops and licenses internal combustion engine technologies. The company is applying these technologies to develop a new, smaller and lighter internal combustion engine that produces substantially more horsepower and three times more torque on less fuel than conventional engines of similar size. Although the internal combustion engine as we know it today may never meet the strong demand for cleaner and far greater fuel-efficiency, the Axial Vector engine is designed to easily meet these challenges.

The Axial Vector™ engine will target a number of specific military and industrial applications. The company is also developing a family of electric power generators incorporating its unique Axial Vector™ technology. These generators will consume less fuel per unit of electrical power output and are significantly smaller than any known internal combustion engine generator.

Adaptive Propulsion Systems has partnered with Axial Vector to

...

New GCC single currency agreed, will it include gold?

Filed under: Gold & Silver, Inflation, Oil Prices, UAE Revaluation, UAE Stocks, US Bonds, US Dollar — peterjcooper @ 8:56 am

Gulf Cooperation Council leaders yesterday concluded their 29th annual summit meeting in Muscat, Oman with a final approval for the creation of a single currency for the six-nation economic bloc, still targeted for 2010.

Saudi Arabia is the largest economy in the GCC and boasts substantial gold reserves. But whether gold will be included in the currency basket has not yet been decided. Golden opportunity

GCC assistant secretary-general Mohammad Al Mazroui told Gulf News: ‘We first have to decide on the location of the Central Bank, then the Central Bank and Monetary Council will have to decide on the gold reserves for the Central Bank’.

The creation of the GCC single currency - likely to be known as the Khaleeji which means Gulf in Arabic

...

The New Year is barreling toward us like a runaway bus. Today's Must-Read: A href=http://blogs.cfr.org/setser/2008/12/29/the-collapse-of-financial-globalization/#more-4285STRONGThe Collapse of Financial Globalization/STRONG/AbrbrBrad Setzer's writing style is a bit dry, but his charts are eye-popping and he makes his point like a silver bullet to the brain: private capital inflows to the US and private capital outflows from the US have fallen sharply. As in, fallen-off-a-cliff sharply.brimg style=WIDTH: 480px alt= src=http://local.content.compendiumblog.com/uploads/user/7e88b461-578b-47f3-88ec-038e212ad053/aa0ff38d-9bb9-44a5-bba5-8be30d8f6977/end-of-financial-globalization-1.png _height=75 _width=75brSo then, what is propping up U.S. Treasuries and the U.S. Dollar? America's livin' large lifestyle is largely supported by China and Japan (because they want to sell us stuff). The other big lender is Saudi Arabia, which also has an advantageous financial arrangement with the U.S.brbrIf and when China, Japan and Saudi Arabia are no longer able to support the continued growth of US deficit financing, the dollar and the bonds will decrease in value. And that fall could come with ...

Oil prices have fallen 70% since hitting a record $147.27 a barrel in July, which means in just five months, crude has given up all the price gains it made in the past four years.

After such a wrenching plunge, many analysts believe the outlook for the “black gold” remains bleak – and in the short term it certainly is. In the long run, however, dwindling supplies, resurgent demand, and a lack of investment will cause crude oil to double, triple, or even quintuple in price over the next few years.

In fact, the Paris-based International Energy Agency (IEA) – energy advisor to 28 industrialized nations – says oil will rise to $100 a barrel by 2015, as a result of a major “supply crunch,” and will ultimately soar to $200 a barrel.

But before it does, prices are likely to sink even further, perhaps falling as low as $20 a barrel in

...

Oil above $40 a barrel; geopolitical risk returns… Israeli air strikes go into third day… China to build up oil reserves while price is low

Oil prices rose above $40 a barrel on Monday, boosted by the weak dollar and Israeli attacks on Hamas that served as a reminder of tensions that could threaten Middle East crude oil supplies.

U.S. light, sweet crude was up $2.75 at $40.45 a barrel by 1335 GMT, below a session high of $42.20.

Oil is on track for a nearly 60 percent loss this year, the biggest annual fall since futures began trading 25 years ago.

London Brent crude rose $2.88 to $41.25 a barrel, after touching a session high of $43.18.

“Geopolitics had disappeared from the oil scene for the last couple of months but will regain some price premium with the latest Israeli

...

Oil prices could fall as low as $20 a barrel in early 2009, says Jason Simpkins. But don’t expect these low prices to last long. Dwindling investment will prompt a longer-term supply crunch, which will send crude to new record highs. Jason gives seven ways to profit from this coming spike.

This from Money Morning:

Oil prices have fallen 70% since hitting a record $147.27 a barrel in July, which means in just five months, crude has given up all the price gains it made in the past four years.

After such a wrenching plunge, many analysts believe the outlook for the “black gold” remains bleak – and in the short term it certainly is. In the long run, however, dwindling supplies, resurgent demand, and a lack of investment will cause crude oil to double, triple, or even quintuple in price over the next few years.

In

...

Shares in Qatar, Oman and Saudi Arabia all rose sharply on rumors local soveriegn wealth funds intend to buy shares in local companies. Oman Telecommunications and Saudi Basic Industries Corpóration were the biggest benefitiaries of the rumours.