Oil & Gas ETFs
The Dynamic Wealth Report
November 21, 2008
Gas Under $2 - How To Profit In Your Portfolio
I was driving into the office earlier this week. It was like any other
Monday. Stop and go traffic was grating on my nerves. I’d already
emptied my to-go mug of coffee. The only thing on the radio was blather. To say the least, it was the start of another workweek.
Then the news report came on…
I couldn’t believe what I was hearing. Somewhere in south Phoenix gas
was now selling for $1.99 a gallon. Not just at one station, but at
three stations all at the same intersection.
The news room must have been having a slow day.
Since when does $1.99 gas become the lead story?
I guess everyone’s still concerned about gas prices. It’s hard to forget
paying $4.00 a gallon over the summer. High oil and gas prices are a
struggle for most Americans. This summer it became obvious. With gas
prices skyrocketing Americans drove less, bought less, and generally had
a sour outlook on the economy.
As a matter of fact, high oil prices became a global concern. Companies
started adding fuel surcharges to deliveries. Airlines were on the verge
of going bankrupt. The cost of everyday items was marching higher.
Inflation had gripped a hold of the global economy.
-------------Sponsor-------------
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...
-----------------------------------
It was so bad, that the European Central bank actually raised rates
earlier this year to combat inflation. This move came in spite of the
noticeable decline in economic activity (which should have prompted a
rate cut).
Are these low gas prices going to last?
NO. I don’t think they will and here’s why. OPEC wants more money per
barrel of oil – not less. Remember who OPEC is? They’re the Organization
of Petroleum Exporting Countries. It’s a big consortium of countries
with big oil reserves. They meet and decide what price they want to get
for their oil.
To increase prices they simply produce less. If they want to lower
prices, they’ll just turn on the taps. Funny thing was with oil peaking
at over $140 a barrel, OPEC wasn’t so excited to bring prices down. They
accused the US and other western countries of consuming too much oil.
They said if we wanted to lower prices we should consume less.
Now they’re getting their wish. Oil consumption is falling rapidly. Of
course, OPEC reacted as expected. As soon as oil dropped below $100 a
barrel they quickly gathered to discuss the situation. On October 24, in
Vienna, Austria OPEC made a decision. They cut oil production by 1.5
million barrels of oil per day.
They wanted the price higher, not lower. With the US teetering on a
recession, they were focused on making more money. Never mind the price
of oil was up almost 400% from just a few years ago.
So how have oil prices responded?
They haven’t. Oil is still sliding lower, which tells me a few important
things. First, the downward slide in oil isn’t about to change direction
any time soon. We’ll head lower… maybe by as much as 50%. OPEC could cut
production again in an effort to prop up oil prices. But it won’t work in
the short term.
The longer term trend in oil is clearly up.
Once the economy starts turning, the prospect of higher US oil
consumption will drive prices higher. We’ll start to see increased
demand and constricted supply. Oil will start moving higher again. Then
the domino effect will take place. With the US on a rebound, Europe and
Asia will see their economies improve. China and India will start
growing more rapidly, and the oil squeeze will return.
We’ll first watch oil fall to $40 a barrel or lower. Then with better
economies, we’ll see prices shoot up to the $70s.
I might be wrong… but I think this scenario is very probable.
If you’re interested in playing fluctuations in the commodities space,
the easiest way is with ETFs tracking the specific markets. Right now,
to profit from oil’s price falling you might look at UltraShort Oil &
Gas ProShares (DUG) ETF. Once oil moves higher you might look at the
PowerShares DB Oil (DBO) ETF. If you time your entries and exits just
right some serious profits can be made.
• Baidu (BIDU) was upgraded to “Neutral” at Credit Suisse. The
Asian competitor to Google (GOOG) was given a $138 price target.
• Eagle Bulk Shipping (EGLE) was downgraded by JP Morgan to
“Underweight”. The fear is they might be in breach of debt covenants if
the value of their assets falls.
• JP Morgan just started research coverage on First Solar (FSLR). The
initial rating is a “Buy”.
Print
Page
Bookmark Us
Home | Whitelist Us |
Terms of Use |
Privacy Policy |
Contact Us | Security |
Site Map