Wednesday, October 24, 2007

Update On Our Oil Prediction

In Sunday's Boldly Idiotic Market Predictions here on this blog we wrote:
Oil will begin to level off and show some weakness, but will finish around $89. But if the winter looks even a bit warm as we head into November, get ready for a wild ride with oil. I wouldn't be surprised to see it fall back below $80 before Thanksgiving, as equities take off.
The funny thing about this one is that it might not have been boldly idiotic enough. As reported by the AP this morning:

Oil prices extended their decline Wednesday as traders shrugged off the latest threat to Iraqi oil flows from a possible Turkish military incursion and focused on the impending release of weekly U.S. fuel data expected to show crude inventories rose last week.

Oil's already back down to about $85! But it could be a long time before it challenges the $90 cieling again on its inevitable march to $100 a barrel.

What Oil Prices Mean for Green Investments... And Our Energy Plays in Particular

Crude oil is expensive right now. In fact, as long as it stays above $50 a barrel, it remains expensive (and profitable) enough for the big oil companies like Exxon and BP to continue "edge" exploration techniques such as deepwater wells... retapping old wells... and long-range bi-directional projects that require expensive technology and expertise.

In other words, as long as oil stays above $50 a barrel, our green energy plays should continue building upwards price pressure. That assumes the companies continue to do the job on the fundamentals side, of course.

I'm talking here about Green Energy Resources, Waste Management Inc., D1 Oils and to an extent, KEPCO.

The point is, oil's not going below $50 any time soon (although it could certainly happen). And if it does, we could certainly reexamine our weighting toward green energy stocks.

Good investing,


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