Another Moon Shot For "Texas Tea"?

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Where Can You Turn $300 Into $1.3 Million Right Now?

Our own small-company specialist, Robert Morris, has found a way to 'sniff out' tiny penny stocks on the verge of a major breakout.  And the timing for this has never been better.

You see, the system takes advantage of an obscure SEC regulation that sends penny stock prices through the roof.

We've seen some stocks gain 852%... 5,450%... even 17,496% in no time flat.

Click here for the details...
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First of all, unemployment figures are at a stubbornly high 9.7%.  With millions of people still out of work, demand for oil and gasoline is relatively low.  Proof of this is found in Energy Information Administration (EIA) numbers.

According to a recent EIA report, oil refiners have “significant excess refining capacity”.  In layman’s terms, this means demand for gasoline is very low.  So low in fact they are shutting down oil refineries.  That’s right, oil refiners are either idling plants or operating at rates well below full capacity.

We can also see from the EIA, inventories for crude oil have been building for nine weeks straight.  This means the amount of oil in storage for U.S. consumption has been rising.

Also, the Organization of Petroleum Exporting Countries (OPEC) recently announced it has nearly six million barrels per day of spare capacity.  This means millions of barrels of production could be quickly added to the markets.  All they have to do is turn on the tap…

With these bearish fundamentals, the price of oil should be much lower.  I think a reasonable price for oil is around $60-$65 a barrel, especially given the current economic conditions.

Yet, the markets say otherwise…

Crude prices have risen 18% in the past two months.  All while U.S. crude supplies are growing.  These supply levels should be keeping a lid on oil prices.  But they’re not…

Here’s the current chart for crude…


As you can see, oil recently broke out of a trading range between $70 and $82 a barrel.  The green line shows a clear long term uptrend for oil prices.

At this pace, if the economic recovery continues, we’ll see oil prices well above $100 a barrel in 2010.  And you know what that means… we’ll be paying $3.50 to $4 a gallon for gas in no time!

Why are prices rising so quickly?

Clearly the oil market is ignoring the current fundamentals in the economy.  Demand for crude products is low, supplies of crude are growing, and unemployment remains high.  Yet, prices keep moving higher.

Let me tell you why…

First, the oil markets may be discounting the early stages of peak oil.  Even though we have millions of barrels of “resource slack” in OPEC and many billions of barrels of oil left in the ground, crude could just keep pushing higher due to growing global demand and peaking of global production, real or imagined…

Geopolitical risk is high right now.  Tensions with Iran are building.  Iran refuses to give up on its nuclear ambitions.  Any military action in Iran will cause crude prices to explode in the short term.  Some investors are getting in front of this news.

Lastly, oil could be climbing on inflation fears.  The U.S. has printed trillions of dollars to avert financial calamity.  At some point, the affects of all the printing will hit the economy.  The U.S. Dollar may plummet and anything priced in dollars (like oil) will skyrocket.

But the bottom line is this…

None of these “fears” are playing out as of yet.  Peak oil theory can’t be confirmed.  There is no war with Iran.  Inflation (according to government figures) hasn’t even kicked in yet.

That leaves one last reason oil prices are still rising… blatant speculation.

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