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Why Oil Will Head Higher

It's hard for anyone to make money in a down market. That's also why...on the flip side....a novice retail trader can look like a pro in an "up" market...works both ways. ha-ha!

But even pros don't get it right all the time...they're just usually the ones that make it the long haul while others blow up (but a few pros do that too, ha-haha!) Of course, the average age of your average hedge fund manager is wayyyyy too young in my opinion.

Why Oil Will Head Higher

My point exactly. Thanks for the insights. I totally agree.

It's not that it has to go up tomorrow...but it does have to over time due to these things you and I are pointing out. Great thoughts!


On Jan 08 10:34 AM biggintx wrote:

> I have been around the oil induustry for 60 years. Oil will go up,
> $40-50 oil is not going to promote exploration or revocery from shale
> and sand. Drillers are already backing off. Oil men are slowly learning
> that puting their $$$ into future profits in oil is riisky at best.
> Why produce more oil so that the price can go down? It is a business.

Why Oil Will Head Higher

Many are wrong over the short term. However, its the "smart" institutional money that tends to get it right over the long haul. They do it full time, have more data, resources, better systems and better contacts. This will always be an edge over the "average Joe" that does this in his spare time from his home PC after work.


On Jan 08 01:20 AM Kunst wrote:

> On the other hand, if the smart money is wrong and recovery is farther
> away, these could be nice short plays. Put options, anyone?

Why Oil Will Head Higher

Demand will still outstrip supply ...also, you have to remember that there are issues with refineries as well. Pump as much as you want...still got to get it refined. They can't build those fast enough...and many places don't want them "in their back yard". So that poses a problem too.


On Jan 07 07:19 PM geolog wrote:

> Hello,
> I would like to inform you, that to significant increase of exploration
> success and company energy potential there is new technology for
> oil/gas detection.
> With new exploration technology (patented invention US 7,330,790)
> oil industry could make up to three times more oil and gas discoveries
> than when using conventional technology. And the fact that new technology
> won't need more investments is also very important. It can significantly
> increase company dividends.
> The technology is designed and successfully tested in the Barents
> and the Black Seas as well as in the Gulf of Mexico (see: binaryseismoem.weebly....).

>

Why Oil Will Head Higher

I'm no expert on diesel. However, whatever you do...make fuel efficiency at the top of your list when purchasing a vehicle. We are moving into a new era where energy prices will climb faster in the next 10 years than they did the previous 10. World demand is increasing as emerging economies have an ever-expanding middle class that can buy vehicles for the first times in their lives. ..not to mention here in America you have more "real" household income than ever before...back in the 50s-60s and even some in the 70s...many were "one income families". Now dad works, mom works...heck, even the teenagers work. So this causes more moving around..more transportation demands.

So the increasing demand upon a finite supply works in the favor of oil and thus eventually gas going back up.


On Jan 07 12:37 PM mbd1175 wrote:

> Sean,
> I was wondering if you had any idea about how the price of gasoline
> and diesel will be likely fluctuate in the future. I was thinking
> of buying a new diesel car, but one downside to the better mileage
> is that the fuel itself costs more. 20 years ago diesel was cheaper,
> but now for some reason it's more expensive. Theoretically it should
> be cheaper because it's cheaper to refine as it is a less refined
> product. I wonder if this trend will continue, or if the oil companies
> will be building more diesel refineries to compensate for this and
> eventually reduce the price compared to gasoline. Thanks.

Why Oil Will Head Higher

We probably initially will see a volatile range. Because rarely does a trend instantly go from a downtrend to an uptrend. There's a transitionary, sideways consolidation phase typically and I think that's the part that you are referring to. True.

Thank you guys for reading my posts and commenting.


On Jan 07 08:28 AM scfranklin94 wrote:

> I think this run up may push it to $60, but it will fall back into
> the mid-40s when production figures for OPEC come in and everyone
> sees that Iran isn't cutting back.

Why Oil Will Head Higher

Don't believe the lies of the media. Speculators can't "make" trends...they simply follow them.


On Jan 07 08:19 AM Billgls wrote:

> Because the Futures Speculators with their greed will drive it higher
> for their benefit only.

Why Oil Will Head Higher

Yep, I totally agree. Thanks for the comments. I appreciate it.


On Jan 06 11:06 PM jepittman wrote:

> Sean,
>
> Thanks for the article. Your scenario is very plausible. An economic
> recovery is coming IMO this year, maybe sooner than most expect.
> Oil, gold, and stocks will transition to bull markets. It won't happen
> in a straight line but the stage is being set for higher prices.

Why Oil Will Head Higher

I do agree that stock rallies tend to lead commodity rallies overall...and this would include oil. Oil is just a safe longer term bet in my view. You may or may not have a "need" to buy stock tomorrow...but you will be using oil/gas and oil based products tomorrow and the next day, etc....and so will billions of others. There's the fundamental driver. An undeniable demand.

Don't get me wrong, I'm buying stocks here too (in the form of ETFs..all cash, no leverage) but also bought up oil in the 40's through its tracking stock (USO) as I prepare for the coming economic recovery and higher prices to come.

That's also why guys like Jim Rogers have oil as one of their top picks to buy in 2009. It's got the best fundamental "bet" of most financial assets out there right now.


On Jan 06 01:49 PM zeronimo wrote:

> of course Oil will head higher because it is cheap right now and
> people are buying on the news about conflicts between Israel and
> Hamas (or the Middle East in general).
>
> but also expect that people will take their profits as soon the rally
> goes down. so i don't see the gas will go higher long term soon.
> it will go up short-term and i still expect the worst of it.
>
> oil price will be a lagging indicator for the bullish market. what
> i mean is the market will go up first before the oil will clearly
> be bullish long-term again.

Why Oil Will Head Higher

Tell Jim Rogers that. He's buying up oil because its fallen below production costs. Therefore he (and I) both know that it has to eventually go up and the at the 30-40 dollar a barrel oil will likely be the bottoming region and that we'll trade sideways for a while in a volatile range and eventually take out new highs again into a new oil rally.

By the way, in the last 7 days, guess what stocks went up the most? Transportation stocks. That's typical when the big institutional investors feel that an economic recovery is 6 months away...they buy up the transports and technology stocks. Well you buy transport stocks just ahead of an increasing demand that is preceived about 6 months down the road. That pick up in demand will stabilize oil and eventually drive it higher. These institutions buy it now while the prices are low and all of the retail investors are scared to touch it. For when it is obvious that the economy is recovering, the great discounted prices will already be gone. Thus the retail investor is always late to the ball game.


On Jan 06 04:59 PM xom-only wrote:

> way too soon to go long oil unless you are betting on a war disruption.
> this recent runup started with the isreal hamas agreement not being
> resigned, when the intrusion is dated the price of oil and oil stocks
> will drop back to december lows. my opine

Why Oil Will Head Higher

Cheaper oil was also caused by a slow down in the economy which was a slow down in the "need" for goods and services which means there is less of a need for employers to employ people since there is less demand (business going on).

Therefore, when more people had jobs, they could afford to pay the higher costs of gas. In other words, the paycheck is a bigger loss than the difference in the high to low gas prices.


On Jan 06 02:21 PM christiaan wrote:

> 60 dollar is a fair price for it, if you look to the past, also if
> you look to euro-dollar price now.
> It will be higher the price on oil whats normal, for the normal consumer
> its good to have low gasoline price, they get better from it, how
> i will imagine, most pay my energy bill, that 2 times get higher
> it reduce my free income with more than 20 percent, cannot save money
> anymore, with a cheaper oilprice i do get it better then before,
> so what about economy crisis?

Why Oil Will Head Higher

There is a ton of supply right now out there. You are correct. However, between OPEC and the global economic turn around...that will "fix" that for the oil trader. It won't happen overnight but it will happen and will have been a great place to buy in for the longer term in my opinion.

That's why its good to buy with cash, no margin and just buy the oil tracking ETF (USO) and not worry about rolling commodity contracts.

Thanks for writing.


On Jan 06 12:24 PM Ron2008 wrote:

> Sean, what about the huge amount of inventory hanging over the market?
> 50 mil + floating in VLCC. Cushing is getting full. That plus weak
> demand for all of 09 will keep gasoline below 2.50.

Why Oil Will Head Higher

Oil is below the cost of production right now. OPEC is restricting supply and the eventual turn around of the global economy will put pressure on the supply due to increased demand.

This is why guys like Jim Rogers are buying up oil once again. I've personally also bought up the oil tracking ETF too (USO)...all cash, no margin...that way I don't have to "time" the exact turn around but will benefit richly when breaks out into a new uptrend.

The best time to buy is when there are the most pessimists out there. Right now, we're seeing huge amounts of that....

Thanks for your comments and for taking the time to read my articles. I appreciate it.

Why Oil Will Head Higher

When hope is lost is when bottoms are formed and new, fresh institutional money can start building positions while the retail public licks their wounds for a while.

Thanks for your comments even though we disagree. That's what makes a trade....each trade needs two sides...a buyer and a seller (or a short seller).


On Jan 06 11:00 AM 1977°C wrote:

> forgot to add why demand for financial information is down 50%, because
> people lost hope.

Why Oil Will Head Higher

Stock blog volume is not a predictor of future oil prices. However, from what I see on Seeking Alpha, they keep on forging ahead quite well. I love this site.


On Jan 06 10:59 AM 1977°C wrote:

> Oil will not go to 60$ not in December 2009 and not next month, and
> you know why?
> Because all best stock market blogs and websites are getting about
> 50% less visits than last year, and you know what that mens?
> It means that we are in very serious economic collapse that will
> make many people mostly from middle class very poor and majority
> of poor very slim.
> If you think few billionaires will make for the lost gasoline demand
> during this 1929 Part II crash, then think again.