Luckily, I was bearish on oil until recently. I said to short oil when it was at $120 per barrel on 04/23/08. I was a little early to the party, but oil did drop below $33 a barrel in December of 2008. Oil plummeted $114 a barrel after reaching its record high last summer. But, now I think oil has bottomed and will head higher. My fundamental and technical indicators are pointing to higher oil prices. . .Here are just a few reasons why I think oil will run higher:
- There are many potential geopolitical flash points around the world that can flare up at any moment, which could disrupt oil supply
- OPEC plans to meet Sunday in Vienna, and a few of the cartel's leaders have said more production cuts are to be expected
- Crude oil prices held up in the face of new 12-year lows in the stock market last week; this is very bullish for oil
- Oil exploration companies increasingly drilling for oil in harder to reach places, and this adds to the cost of exploration and results in higher oil prices
- Most of the world's cheap oil has already been discovered, and many experts think the world is running out of oil
- Soon we could see demand increase to a level that will start to exceed supply. Demand will grow in the years ahead as India and China continue to modernize.
While oil inventories are high right now, they may start to decline towards the end of the year. I suggest you start looking at investing in oil over the next few months and use big down days as buying opportunities. Currently my indicators are pointing to higher oil prices in the near term.