“The Easy Way To Ride One Of The Most Profitable Bull Markets In History
“Don’t let oil’s current price fool you this time.
“Thanks to an already guaranteed shortage – just around the corner – these low prices won’t be around for long. ”
That’s the scenario of the new teaser from the Pure Asset Trader, a newsletter by Ian Cooper that specializes in energy and commodity trades — it’s a fairly price one, “on sale” for about $800 a year. (Used to be called Pure Energy Trader, under which name I wrote about some of their old Bakken oil teasers last year.)
And in the teaser for this newsletter, they tell us not only that oil is beginning another historic bull run (they use more words than that, of course), but that they’ve got an easy way for you to profit.
They rely heavily on the International Energy Agency’s World Energy Outlook and repeat it’s claims that there will be a “supply crunch” after 2010, and they jump on the IEA’s projection that the world will rely on Canada as the world’s largest energy producing country by next year. I haven’t read the report from last year (2009’s report won’t come out until the Fall), so we’ll take them at their word on that one.
The big claim, though, is that although the world may rely more on Canada and its oil sands, those oil sands projects have in many cases been delayed, postponed, or “slow tracked” thanks to the recent drop in oil prices — so if demand picks up quickly and that oil is needed, there will be a bottleneck as increasing demand hits decreasing supply.
“On the other hand, as oil started becoming “affordable” again – in the $30 range – it triggered an unstoppable chain of events that is guaranteed to drive the price of oil through the ceiling… and make investors like you filthy rich on the way.
“You see, thanks to prices becoming too low, many of Canada’s oil companies – resources that would supply crucially needed oil for the U.S. and rest of the world in a few months – couldn’t stay in business.
“And we need that oil, like a junkie needs his fix.
“In fact, the U.S. depends on AND imports more oil from Canada than from Saudi Arabia, Kuwait, Libya, and Iraq – combined.
“But one by one, we started finding major oil projects temporarily closing up shop. Drilling and refining stopped. Exploration and testing lost all capital. And their share prices ultimately plummeted.”
So that’s a long way of describing the basic phenomenon of supply and demand — when demand sinks, prices drop, and producers cut supply, which causes prices to rise, and the dance continues unless some equilibrium sets in for a while (all else being equal, of course). In the oil market, we get lots of outside interference with basic supply and demand price adjustments because marginal supply increases generally come either from the OPEC cartel nations (largely Saudi Arabia) who try to manipulate the price and whose reserves are generally not transparently reported, or from the Canadian tar sands and ultra deepwater projects that are only economically feasible at relatively high oil prices, like the Tupi field discovery offshore Brazil.
And as we saw last year, oil can certainly take big swings fr