Investing For $100 Oil

I think we are already in a recession. I expect it to be powerful, but I don’t see it affecting the global demand for raw materials. Domestic demand for energy will continue to increase, regardless of a recession.

The EIA reported global oil consumption increased 1.4 millions of barrels per day during the second quarter of 2007 compared with levels a year ago. Meanwhile, production is falling in Venezuela, Iraq, Iran, Indonesia, Libya, Nigeria, Kuwait, Mexico and Russia. Saudi Arabia is pushing on a string to maintain production at current levels.
Also, new production that is brought on line to replace mature light crude is predominantly “difficult to refine” sour crude.

Prices do not run linearly. They zig-zag. Crude moved to $78 recently, which was essentially the old 2006 high, and everyone turned bullish. We forecast a technical correction back to $69.

Due to the opportunity handed to us by the mindless liquidation over the last couple of weeks, it really doesn’t matter at this point. You need to be investing now for $100 oil in the future.

How do you invest for $100 oil? The best avenue is to seek those situations that make money as a consequence of $100 oil, not necessarily those that produce it.

Forbes