Black Gold
Monday, March 6th, 2006
By Michael Lombardi, MBA for Profit Confidential
Veteran readers of my column are familiar with my bullish position on oil. I simply believe demand for oil will push oil prices higher, making the cost of gas for our homes and cars, and the cost of doing business, more expensive.
Why, after a time period of relatively weak oil prices (1986-2000), did oil prices start to rise rapidly? Different analysts will provide different answers (everything from supply problems from OPEC to national disasters) on why oil prices have risen. However, in respect to use, the United States’ demand for oil has not changed much over the past several years.
As I have written before, it’s my belief that increasing demand for crude oil from China and India are causing oil prices to run up. In fact, there’s absolute proof of this in the demand and use numbers for oil.
China is now importing in excess of three million barrels of oil a day–a huge jump of 70% from a year ago. And many other Asian countries have also increased their demand. South Korea’s oil imports jumped 19% this January from January, 2005.
As the economies of China and the largest Asian countries continue to growth rapidly (we are talking GDP of 7% to 10% in China this year), oil prices will continue to rise. Technically, from looking at the charts, I believe oil prices have formed a strong base and that the oil prices will soon test their 2005 record high. I really would not be surprised to see crude oil prices jump above $100 a barrel as China’s economic train keeps motoring along.
(This past January, China imported the equivalent of one-third the oil the United States uses in month. Only a few short years ago China was not even consuming one-tenth the oil the U.S. consumes).
So, where do oil prices go from here? In my opinion, they move much higher. For investors, the shares of quality, senior oil producers are worth a serious look.
Next Post: Mining Store Proves a Good Investment
Previous Post: Singapore a Risky Venture
Tweet
Sign Up for PROFIT CONFIDENTIAL and
receive a FREE copy of our exclusive report:
"A GOLDEN OPPORTUNITY FOR STOCK MARKET INVESTORS"
We respect your privacy and
will never share your e-mail address.
Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.Follow Michael and the latest from Profit Confidential on Twitter
