The oil market is on fire.
Last night in
Some people think its Tropical Storm Katrina thats driving oil higher. They say the storm could impact
Theyre exploding higher because, for over twenty years, the world took energy for granted.
We expected oil prices to be cheap. We guzzled gas like we drink water. But we got our priorities mixed up.
We should have invested in oil infrastructure, oil refineries and alternatives for oil. Instead we got dazzled by the aura of tech stocks and other paper assets. We diverted precious capital to the wrong place at the wrong time.
Now were paying the price. Our failure to invest in energy has turned a dire-but-manageable situation into an acute and chronic crises that could be with us for decades.
Amazing Facts
Behind The Surge
The facts are amazing. But they are not technical or mysterious. Theyre fundamental and transparent …
- Americans use 25 barrels of oil, per capita, per year. Compare that to
- 90% of all the oil in the world has already been found.
- For every new barrel of oil thats been found, FOUR barrels are being consumed!
- Even the oil thats already been found is running down: 80% of existing oil fields are in their depletion phase!
This is a supply-demand equation that is completely out of whack: The … world … is … running … out … of … oil.
Theres simply not enough oil to go around … demand is overwhelming … and Mother Nature can pony up only so much more.
Most people dont understand this, and even the experts seem to lose sight of it. But the most fundamental fact of all is also the most inescapable: It took Mother Nature 175 million years to produce that oil. Once its depleted, theres no more. Period.
An estimated 80% of the worlds oil fields are in their depletion phases because we consume four barrels of oil for every new barrel of oil found.
Theres nothing you or I can do about that. We cant change how much oil everyone else consumes. We certainly cant change the supply situation.
But we CAN profit from the opportunities this great bull market in energy is offering us.
This is not a bubble like the 1990s fling with tech stocks. Its also not a flash-in-the-pan spike in oil like we saw in the 1970s. Its a long-term, fundamentally-driven bull market that shows no sign of slowing or abating.
The oil bull market began with a barrel of crude in the teens. At the very minimum, it will continue until the low $100s perhaps $110 or $120 per barrel. So at most, its only HALF over. That gives you more than ample opportunity to profit. Plus, it gives you the advantage of a clearly established trend.
One of the investments Im looking at right now, for example, has the potential to spin off $4,200 in gains on a modest investment of just $800.
Another could tally up as much as $7,125 in gains on a $1,375 investment.
And a third could add another $4,800 in gains on just a $1,600 investment.
In a moment, Ill tell you why I think these companies’ share prices are likely to explode higher and how to play them for maximum profit potential.
But first, take a closer look at the next major force to hit the oil and gas markets. Like Tropical Storm Katrina, its impact will hit within days. But unlike any wind, its pressure will be consistent and long term.
Just SIX DAYS FROM NOW,
on September First …
China is going to start yanking hundreds of millions of barrels of oil off the world market … crushing an already-tight supply-demand equation … driving crude oil to $75, $80 and beyond.
Reason:
Most of the oil is going to be pumped into its brand new storage facility near the Zhenhai refining complex, one of 16 major new storage tanks. And
Strangely, very few analysts are talking about
Perhaps they think the oil to fill the tanks will come from
But heres what I see:
First,
Plus, as much as 40% of
Second,
Thats a key reason
Third, right now,
And just four sites in Zhenhai, Daishan, Xingang and Huangdao have the capacity for a total of 100 million barrels.
Oil will start flowing into these tanks in just a few days, and I have no doubt
Ive met with traders on some of my visits to
Why Oil Could Reach
$80 Before Year-End
No one can predict the future with precision. But when I look at the charts for oil, I can clearly see how the oil market is anticipating this new force.
FIRST, I see a clear uptrend channel that connects four recent peaks:
Peak #1 was last October.
Peaks #2 and #3 were in March of this year.
And peak #4 was less than two weeks ago, in mid-August.
Each of these pierced the upper part of the channel, and now the price of oil is about to pierce it for a fifth time.
In my experience, the fifth attempt is usually the most forceful, and successful. So to me, this is the sign of a new, accelerated move to the upside. Once the market breaks up though the channel, it rarely looks back. It becomes a run-away freight train.
Conclusion: Dont be surprised if we see $75 oil very soon, and $80 or MORE by year-end.
An Oil and Gas Stock Im
Recommending Now
First of all, keep a big chunk of your money safe and liquid, using Treasury bills or money-market funds that invest only in short-term Treasuries. No matter what other investments you choose, always be sure their risk level is right for you.
Second, for your core portfolios, hold all energy shares recommended in my Real Wealth Report and those recommended by Martin in his Safe Money Report.
These are excellent long-term holdings that are designed to ride the energy markets higher for the next 12 – 24 months. I feel they offer great appreciation potential.
For example, consider an oil and gas company such as Pioneer Natural Resource (PXD). I recommended this stock to my Real Wealth subscribers when it was trading at the $38.50 level. Now its at $45.77, up 19%. But its just beginning what I anticipate will be a long rise.
Third, other natural resource markets are also heating up. For example, gold is firmly holding support, about to enter a new blast-off phase. Copper is already at record highs. And other commodities are close behind. So you should also hold any natural resource shares and gold shares weve recommended.
Plus, for money you can afford to speculate with, consider the incredible leverage you can get when you buy options. You get virtually unlimited profit potential. But you can never lose a penny more than you invest.
Control $85,000 of Oil
Shares for Just $3,775.
(Almost 23-to-1 Leverage)
I just told you how
Thats why, right now, I’m looking at three companies that have solid access to China, making them what I consider to be ideal candidates to benefit from this major new force.
You could buy 400 shares or more in each company for a total of about $85,000, and I think you would do well. But you can avoid that capital exposure by spending just $3,775 on a select portfolio of their options. That’s the equivalent of almost 23-to-1 leverage.
Here’s the range of possibilities as I see them:
If Im right on all three companies, you could make as much as $19,900 (before broker commissions).
If Im only half right on where these shares are headed, you could still walk away with as much as $9,950.
And even if I’m totally wrong, the most you could lose is your $3,775 investment plus commissions not a penny more.
Thats the kind of risk-reward ratio I like: Up to $19,900 in potential gains versus a total risk of about $3,775.
Why I Think These Three Companies
Are Ideally Positioned to Ride the New Wave
THE FIRST COMPANY is a major refinery with facilities all over the world, including Asia. Its well known for its engineering services for refining heavy crude oil precisely the kind that China needs to fill its strategic oil reserves.
A key point: Most of Chinas refineries can only refine light crude oil. So theres no question in my mind that top refiners of heavy crude are going to scoop up some major contracts from China. And this company is at the top of my list of candidates.
For the six months ended this June, its revenues jumped 35%. It has very little long-term debt and plenty of cash on hand. Plus, it already has a strategic relationship with a subsidiary of China Petroleum and Chemical Corporation.
Right now, 500 shares would cost you about $28,900 if you were to buy them outright. But you can effectively control the same 500 shares for a modest investment of just $800 one-36th of what it would cost you for the shares.
THE SECOND COMPANY on my radar screen is an engineering company thats also a top candidate to provide logistics and maintenance services to China.
It’s not in China yet. But it’s a major engineering service provider to India, and this experience gives it a leg up to grab multi-million dollar contracts from China as well.
To buy 500 shares would cost you about $28,650. But with call options, you can purchase contracts representing the same 500 shares for just $1,375.
THE THIRD COMPANY is a multinational oil producer with over 170 million barrels of oil in Asia. Thats not going to be enough to fill all of Chinas present and future oil tanks. But it does give this company a first crack at supplying China.
If you bought 400 shares, it would cost you about $27,500. But the equivalent options cost only $1,600.
With just these three companies you can own call options that represent a total of 1,400 shares worth about $85,000 for just 3,775. Thats almost 23-to-1 leverage.
No Margin,
No Unlimited Risk
If this leverage required investing on margin, borrowing money, or exposing you to unlimited risk, I would be dead set against it.
But options require no margin or borrowing. With the purchase of stock options, you CAN lose money. But your risk is always strictly limited to the amount you invest. Meanwhile your upside potential is virtually unlimited.
Thats why Im such a fan of options. And thats why I recently launched my brand new service dedicated to trading options in the oil and energy sectors Energy Options Alert.
It covers everything from oil and gas refiners … to natural gas distributors … to oil shipping companies … to oil and energy engineering firms and more.
As a member, you get the Energy Options Alert Trading Manual, which gives you the A-B-Cs on the various types of energy options and how they work: How they provide you with incredibly powerful leverage on the upside. How they limit your risk. How you can maximize profits.
You get my special report TAKEOVER FRENZY which gives you the ins and outs of how to identify takeover candidates in the energy markets.
And you get hot profit opportunities with strictly limited risk all coming to you instantly via e-mail.
Naturally, because these markets move so fast, the initial recommendations you receive will depend on when you come on board and what’s happening in the markets at that time.
But no matter what, you get precise instructions, telling you what to buy, when to buy it, how much to buy, and what to pay for it. Then, its up to you to pull the trigger, or not.
Two-for-One
Charter Membership
The price of the service is $5,000 per year. But in light of the unusual circumstances in the oil market right now, I am making an unusual offer:
If you subscribe for one year, I will give you the second year free. Thats two full years for the price of one. And as a Charter Member, you will be entitled to retain this rate in perpetuity, as long as your membership remains current.
There are three limitations:
First, I have extended this offer to only 200 more Charter Memberships.
Second, this is strictly for subscribers to our publications. It is not available to the general public.
Third, no other discounts are available with this offer.
Naturally, if you wish to cancel at any time in the first year, for whatever reason, you will receive a full, pro-rated refund on the balance of your subscription.
A Heck of a Lot of Money Is Being
Made in The Energy Markets …
… especially by those savvy enough to understand all the ins-and-outs … why prices are surging … whats happening around the world … and China is affecting these markets now and for years to come.
Thats why I want you to have an opportunity to join Energy Options Alert at the special Charter Membership two years for the price of one. After these 200 membership slots are gone, the price reverts to the normal subscription rate.
And in just six days, China will likely put more upside pressure on the price of oil, as it begins to fill its strategic oil reserves. I believe this is going to dramatically impact the share prices of specialized energy companies.
To join Energy Options Alert, and get set for your first set of high-profit potential trades, pick up the phone, call Lyndall at 877-719-3477 and mention your personal code of p446-56287. Or order online via our secure website.
Yours truly,
Larry Edelson
Editor, Real Wealth Report
Energy Options Alert
About MONEY AND MARKETS
MONEY AND MARKETS (MAM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Larry Edelson, Tony Sagami and other contributors. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MAM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MAM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Contributors include Marie Albin, John Burke, Michael Burnick, Beth Cain, Amber Dakar, Scot Galvin, Michael Larson, Monica Lewman-Garcia, Julie Trudeau and others.
2005 by Weiss Research, Inc. All rights reserved.
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