Peak Oil News and Message Boards

Just a thought. Last time gold jumped to near current highs, it was slammed right back down into the 800's and the cash seemed to flow into oil. If the current smackdown continues, there are still going to be inflationary expectations, and current reports about peak arriving sooner than expected look like a set up for a blast off to me. What do you think?

I bought stock in oil service companies, deep ocean drillers etc. last March.

So far so good, but if we get a double-dip recession all bets are off.

Nonsense Plantagenet, if we get another nasty second dip all it will take is patience. The good stuff is the best investment no matter what happens. One just may have to ride a few ups and downs, that's all.

eastbay wrote:Nonsense Plantagenet, if we get another nasty second dip all it will take is patience. The good stuff is the best investment no matter what happens. One just may have to ride a few ups and downs, that's all.

Right on, Eastbay.

Though I've ridden "Patience" all the way up from $32.40.
Wouldn't mind riding "Exuberance" for a while, now

$75 remains pretty stiff resistance, it will take quite a large hammer to shatter that glass ceiling.

I think it will take quite a while to break $100.
More than a year away.
Storage is very high.
Usage will be slow to recover.
It will stay in this under $75 level to the end of the year.
I predicted a high of $90 this year so I don't think I'm going to win the price thread but I'll be top 15.

It's all pretend money until you sell. And, then it's still pretend money ! But, you can get goods and services with it for now. So, the question isn't when to buy, its when to sell.

The way the car sales are going in China and India, we will hit $100/barrel sooner than most people think.

I'm banking my retirement on my December 2013 option calls at 200 dollars

http://www.cnbc.com/id/33236976


Davep, Jim says you are on the right path.

eastbay wrote:http://www.cnbc.com/id/33236976


Davep, Jim says you are on the right path.

And what about me, Commie?

I had my 500-gallon gas tank topped off and bought another diesel bulk tank.
.
That's the best I could do right now... As I invested in a snow cat...a diesel-powered 4-wheeler... another 6 months supply of chow and 2 more cases of ammunition.

WyoDutch wrote:I had my 500-gallon gas tank topped off and bought another diesel bulk tank.
.
That's the best I could do right now... As I invested in a snow cat...a diesel-powered 4-wheeler... another 6 months supply of chow and 2 more cases of ammunition.

That's probably the wisest move. Good on you!

I just sold an oil related stock that I bought at $1.38 and held for over a year. I had to ride it down after I bought it. I made about %100 profit, in just over a year. I didn't make much because I didn't have much in it, but I was confident going in and knew to hold. The stock is still going up, selling now I think I can buy more shares later cheaper. If I had held on I might have lost this level in a haze of higher and higher unemployment numbers hurting domestic demand.

Now I am waiting for that same stock to fall to the same level I bought it at again, or lower. Oil company stocks tend to be cyclical. During the winter they usually fall. December or early January is usually a good time to buy. The spring run-up to the summer driving season or early summer itself can be good times to sell. Also there can be a rebound right about now, early winter.

I don't know how long the oil company's cyclical stock price behavior can continue. You would expect fundamentals to enter in and set new floor prices as the big picture becomes more public. Another recessionary dip, though, would take up a lot of the slack money that would otherwise find the oil companies.



I think fortunes are waiting to be made in places like South America, Africa and Indonesia. Behind the scenes, where you can still find out about it but it isn't on CNN, a major reorganization of where oil is coming from must occur.

I also think the dividends that established producers like the Canadian trusts offer are hard to ignore. They are on the wane, but market mania could buoy their prices up (the prices of the one's making moves to edge into oil sands while still relying on conventional) as the oil sands become uber hot closer to 2020. While you wait you would get paid to hold. The game is nothing to sneeze at considering the interest rates they offer. You could double your money while you wait.

evilgenius wrote: Oil company stocks tend to be cyclical. During the winter they usually fall. December or early January is usually a good time to buy. The spring run-up to the summer driving season or early summer itself can be good times to sell. Also there can be a rebound right about now, early winter.

I don't know how long the oil company's cyclical stock price behavior can continue. You would expect fundamentals to enter in and set new floor prices as the big picture becomes more public. Another recessionary dip, though, would take up a lot of the slack money that would otherwise find the oil companies.

If it were that easy and reliable, the big players like hedge funds and mutual funds would have already arbitraged the obvious profit out of this type of trade. Good luck if you think you can out-time the market, but it's a lot tougher than it would seem - as actually some of your comments which tend to conflict with each other above imply.

evilgenius wrote:I also think the dividends that established producers like the Canadian trusts offer are hard to ignore. They are on the wane, but market mania could buoy their prices up (the prices of the one's making moves to edge into oil sands while still relying on conventional) as the oil sands become uber hot closer to 2020. While you wait you would get paid to hold. The game is nothing to sneeze at considering the interest rates they offer. You could double your money while you wait.

I can't blame you for wanting to be paid while you wait. Many of these trusts tend to be a wasting asset, so the large dividends are really a return on capital, which is why these things tend to be a big tax headache.

I like to get paid while I wait too. Here's an alternative strategy (which may or may not pan out, but has so far):

1). Dollar cost average into positions you like, while prices are low to moderate. These positions could include very high quality producers which pay decent dividends (very decent when shares are way down), or great diversified funds - I use the T. Rowe Price New Era fund (PRNEX). It is well diversified into all major areas of the oil business, typically for about 2/3rd's of its capital, and broadly invests in other commodity related stocks with the balance - precious metals, base metals, forestry, other energy, etc.

I really enjoyed buying this early this year at about a third of where I'd sold it about 6 months earlier. (Better patient and lucky than smart).

2). As long as prices are moderate or below, sell some out of the money puts (small quantity relative to your position) to try to drag the market down to make number 1 more lucrative. At least if the oil market doesn't fall, you keep the option premium, and thus get paid for waiting. I sell puts on DIG well out of the money for this. This correlates well enough with the New Era fund to work just fine.

3). When to sell is the tough one. You can sell after a parabalic crude run-up when oil share price trends diverge from oil prices for weeks. This is how I got out near the top in late summer 2008 (about 70% if my position). Alternatively, you could sell out of the money calls (small amount) when the oil market has gone up "enough" for you, and let those start dragging you out of your position if oil continues even higher.

This way you get paid to wait via option premiums and dividends (if you choose the right oil stocks), without having to play the complex tax games the trusts require.

Clearly, YMMV, but between dollar cost averaging, dividends, and option premiums all dragging down the average share cost - in the long run this should work out fine - AS LONG AS YOU ENSURE YOU DON'T RUN OUT OF CAPITAL. (You WANT capital to continue buying low if the oil market plunges). The main drawback, of course, is for the part of your position you trade/hedge, you miss the potential "big score" on.


Though this doesn't require ANY price pattern for oil to work, it does require PATIENCE. If memory serves, I'd been DCAing into PRNEX for well over a decade before getting the terrific opportunity to dump most of it at a nice profit.

evilgenius wrote:I don't know how long the oil company's cyclical stock price behavior can continue. You would expect fundamentals to enter in and set new floor prices as the big picture becomes more public. Another recessionary dip, though, would take up a lot of the slack money that would otherwise find the oil companies.

This reminds me of something I'd been wanting to ask -- and an opportunity I missed this past winter, leaving a giant STUPID sign on my forehead for not thinking about it.

I was gleefully DCAing into PRNEX in the low 20's with oil in the 30's) and daring it to drop all it wanted). Fine. I had gritted my teeth the first time gold hit $1000 and decided to stay in the gold and silver I've been holding since the mid 80's given the behavior of the dollar, the financial markets, and our elected leaders. After all -- that's what PM's are FOR, right?

So, the thing that never entered my tiny brained noggin was doing a strategic allocation switch from some PM's, using OIL as a dollar hedge, given how low it had dropped while PM's had remained fairly high. By say Feb. I was 95%+ sure the financial system would hold up THIS time - so this would have been a great play. Dump a chunk of PM's and buy great oil shares (which were also often paying great dividends at the time).

I wonder if long term holders of commodities like oil and PM's who are very leery of the dollar/debt long term (like many of the folks on this site):

1). Have thought about strategic switching of PART of their long term commodity holdings when their price ratios change dramatically.

2). Think this is practical to try to use as a long term strategy, for those who plan to hold a lot of dollar hedges long term anyway. (Or will it just result in whiplash and no profits over time?)

3). Have been able to do this successfully over time, and have any general tips they would care to share.

(CLEARLY you would never want to sell your CORE holdings of PM's you hold for when the zombies arrive - I do realize that).


Thanks in advance for any insightful input.

I bought USO at $30 in January, then watched it drop to around $25. It's been crawling back up, It's now at $37.03. I'm glad you say to buy oil now, but what I'm going to do is pretend I bought it today at $37.03, and see if that would have been a good move.

I don't trust any paper investments.

I have some, but I have no faith in them at all.

Revi wrote:I bought USO at $30 in January, then watched it drop to around $25. It's been crawling back up, It's now at $37.03. I'm glad you say to buy oil now, but what I'm going to do is pretend I bought it today at $37.03, and see if that would have been a good move.

I don't trust any paper investments.

I have some, but I have no faith in them at all.

(I have no short term forecast for oil. I just thought this thread might attract some oil investment vehicle comparison/discussion. Long term, I'm very bullish on oil).

Looking at some charts for the past 3 years, past year, past 6 months, etc, funds like USO seem to outperform if oil rockets up, but underperform in the long run. The expense of having to roll contracts monthly seems to hurt them.

When deciding what oil related stock or fund to hold, you might try comparing charts for things like:

USO
VGNEX (Vanguard Energy fund)
PRNEX (T. Rowe Price New Era fund -- mostly diversified oil)
XOM, COP, CVX (well known large oil companies, for comparison)

If you plan to hold long term, I suspect you'll get a better risk/reward in something other than USO. If you expect oil to explode fairly soon, USO might well outperform. (If you're smart enough to accurately forecast oil's price consistently, please sell a news letter - I would happily subscribe!)

Crude oil prices approached but did not quite crack $75 today.
NYMEX records session high (so far) as $74.47.

Let's give it a few more tries, just like for gold $1030

I sleep well at night with an approximate 50-50 split between FSESX and FSNGX. Of course we had a rough ride last Fall, but so did everyone else. It's well on the way to recovery now. Plus these funds will never go out of fashion.

You know, if there hadn't been a run-up last year $75 a barrel would be considered pretty high. Somebody else on this site, I can't remember whom, said recently that there was resistance at $75 that will be hard to penetrate. This is an interesting time.