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

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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.

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strong/stronga href="http://1.bp.blogspot.com/_ngczZkrw340/SVFAWkhXc8I/AAAAAAAAL3k/ueQYKIgYSc0/s1600-h/hrvynia.png"img id="BLOGGER_PHOTO_ID_5283074594387227586" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 159px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SVFAWkhXc8I/AAAAAAAAL3k/ueQYKIgYSc0/s320/hrvynia.png" border="0" //abr /br /blockquotep“In Ukraine, the evidence is still that policymakers do not quite understand the seriousness of the challenges they face,”. Timothy Ash, analyst at the Royal Bank of Scotland. /pp“There is a burgeoning economic crisis in the European periphery,” Krugman said on the ABC network Dec. 14. “The money has dried up. That’s the new center, the center of this crisis has moved from the U.S. housing market to the European periphery.” /p/blockquoteMake no mistake about it. What is taking place right now in Ukraine is extraordinarily serious. The IMF have recently agreed a support loan to the country, but the politicians themselves still can't agree on whether or not they are actually going to abide by the conditions attached to it. Meantime, as we can all see on ...

Austria is justifiably famous for its banking system—particularly for its bank secrecy law, which has the same legal status as the Austrian Constitution. But while Austrians take their financial privacy very seriously, there’s another aspect of Austria that doesn’t get as much attention: residence. With its world-class opera, museums, and galleries, Austria is truly one of the world’s most civilized countries. Vienna, its capital, is a cultural treasure. Indeed, Mercer’s, a major human resources consultancy ranks Vienna as the second most desirable city to live in the world (behind Zurich)—and Vienna is much more affordable. And within an hour’s drive of Vienna, you can visit three different countries: the Czech Republic, Hungary, and Slovakia. Austria is also a popular haven for English-speaking expatriates. While you won’t find the concentrations of U.S. expatriates that you would in places like Costa Rica, Panama, or London, you’ll find a high quality of life and reasonable ...

Recent stories about Russian passports being distributed in Crimea, Ukraine have raised quite a ruckus. But that doesn't seem to be the only place in the Ukraine with some ethnic nationalism issues, and a new report we've translated from Izvestiya after the jump tells the story of Moscow's possible assistance to the Ruthenians - a fiercely independent group located in Transcarpathia, the western-most Oblast of the country, near the Polish, Slovakian, Hungarian, and Romanian borders. For centuries, the region was part of the Austro-Hungarian empire and known as Subcarpathia. (Everything depends on where you’re looking from: if your vantage point is Vienna or Budapest, the region is in the foothills “below” the Carpathian mountains, hence “Subcarpathia”. But if you’re looking from Moscow or Kiev, it’s on the “other side” of the mountains, hence “Transcarpathia”!) After ...

Now that crude has lost 50% (and counting) since July, Andrew Gordon says the political will to develop alternative energy sources may be waning. But election favourite Barack Obama is fully behind clean energy. Andrew says this makes strong companies with new technology in biofuels, alternative energy and clean coal a good speculative buy. Another options is this Global Alternative Energy ETF (NYSE:GEX).

This from Investor’s Daily Edge:

John McCain is a practical guy. He subscribes to the “let’s try anything that works” theory. He’s willing to go with anything that weans the U.S. from Mideast oil. Nuclear, biofuels, ethanol, sun and wind, the traditional oil and gas hydrocarbons, tried and true coal and super-clean thermal and hydro energy – they’re all on table.

Throwing up a dozen tar balls and seeing what sticks isn’t much of a policy. But I see nuclear

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Adam Lass says the vast majority of retailers are ripe for shorting as a new era of thrift grips the US. Aside from bargain stores like Wal-Mart (NYSE:WMT) and the 99 Cents Only Store (NYSE:NDN), Adam says investors should buy put options on retail firms. And the best time to do this is when they talk of “better times to come”…

This from Taipan Publishing:

’Tis the season of too damn many cocktail parties. I simply don’t have the stamina for so much small talk and gossip, and don’t much care for finger food – or weak drinks.

But this time of year they are simply unavoidable (i.e., my wife makes me go). And so, all too often, I am forced to put down my tumbler of 12-year old single malt and my dog-eared edition of Gibbon’s Decline and Fall, abandon my armchair,

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Adam Lass says the vast majority of retailers are ripe for shorting as a new era of thrift grips the US. Aside from bargain stores like Wal-Mart (NYSE:WMT) and the 99 Cents Only Store (NYSE:NDN), Adam says investors should buy put options on retail firms. And the best time to do this is when they talk of “better times to come”…

This from Taipan Publishing:

’Tis the season of too damn many cocktail parties. I simply don’t have the stamina for so much small talk and gossip, and don’t much care for finger food – or weak drinks.

But this time of year they are simply unavoidable (i.e., my wife makes me go). And so, all too often, I am forced to put down my tumbler of 12-year old single malt and my dog-eared edition of Gibbon’s Decline and Fall, abandon my armchair,

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Oil prices have dropped 55 percent from their peak in July and they could go lower. That’s what you want, isn’t it? Cheaper gas and cheaper heating fuel allows you to spend more on things you really need – like your kids’ education or appliances.

Oil cost over $147 just three months ago. Now it is under $70. How low can oil go? How low should you want oil to go?

It should go much lower but don’t be too quick to rejoice. If prices fall further, the vast oil sands of Canada would become uneconomical. The tens of billions of barrels of oil lying under the deep waters of Brazil and elsewhere would cost too much to produce.

Oil first went down on weakening demand in the U.S. Then when it became apparent that de-coupling was a load

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by Edward Hugh: Barcelona Yesterday, the Ukraine received a USD16.5bn loan from the IMF and the IMF at the same time said that it would agree with the Hungarian government on a rescue package in the coming days. Under normally circumstances this would be good news for CEE assets. However, it seems like the markets are totally giving up on CEE. This morning the Hungarian stock markets have dropped more than 10% despite the promise of an IMF package. ......it is worrying that the CEE markets continue to sell-off despite IMF’s clear commitment to support the region’s markets and economies. One might in fact see the lack of positive response to IMF’s rescue packages for Hungary and the Ukraine as an indication that these packages are in fact making the markets even more nervous that something “is seriously wrong in CEE”. Lars Christensen, Chief Analyst Danske Bank, CEE: Markets fail to respond ...