Saturday, February 24, 2007

Oil prices here to stay??

An article on Bloomberg this morning has me convinced that oil prices will not be returning to 20-30 dollars per share. A year or so ago on the 60 minutes television show they did a segment on the oils sands in Canada. These sands are in a remote part of Canada and according to the article are the second largest oil reserve this side of Saudi Arabia. The problem is that it is very expensive to get the oil out of the sand and then refine it into a use able product. Canadian officials as well as all of the oil companies have know about the oil fields existence for many many years, they have just done little to no thing with the "sands" until recently. Why?, because now the price of oil is high enough to allow oil companies to get the oil out of the sands and then refine it. I do not remember the exact numbers but I believe the 60 Minutes episode mentioned something about 40-50 dollars a barrel. According to the attached article oil companies are providing workers with luxury accommodation (well as luxurious as the middle of Canada can be). Maid service, private rooms, flat screen cable TV. They are also investing in the region, building a resort type facility equipted with a bar and ice hockey rink (remember this is Canada). I cannot see these oil companies investing all of this time and money into this project unless they felt oil prices would stay in a price range which allows them to refine this oil in a profitable way. Oil today is 60 dollars a barrel. I see it in one direction in the coming years, and based on this article it seems the oil companies would not disagree.

These are the FX Trading Ideas for Today.

Good Luck and Good Forex Trading




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