About Oil Prices

Kelly Martinez asked:


Questions: 1. ‘Olive oil is good for you’ (True/False)



‘Light’ olive oils are more palatable than ‘extra virgin’ olive oil. Extra virgin olive oil has a strong smell and taste’ (True/False)



‘Real extra virgin olive oil should have sediment at the bottom of the bottle.’ (True/False)



‘Italy is the world’s largest producer of olive oil’ (True/False)



‘The best olive oil comes from Italy’ (True/False)



‘Large brands sell olive oil for less because they buy in large bulk quantities’ (True/False)



‘If is says ‘extra virgin olive oil’ on the label - it must be true’ (True/False)



‘Pure’ olive oil is good quality’ (True/False)



‘Olive oil’ after a time needs to be refrigerated’ (True/False)



‘Olive oil good for frying’ (True/False)



Answers: 1. True. Studies have revealed that real extra virgin olive oil has the following health benefits: anti-inflammatory, protect against bowel, breast and colon cancer, fight heart disease, prevent wrinkles, reduce blood pressure.



False. By definition the taste and aroma of real ‘extra’ virgin olive oil is ‘irreproachable’. Any olive oil product with a overpowering smell or taste is not ‘extra’. ‘Light’ olive oils are refined oils with a very small amount of virgin olive oil mixed in. The smaller the amount of virgin olive oil mixed in the ‘lighter’ the oil.



True (sometimes). Extra virgin olive oil is a natural product, the amount of sediment will depend on many different factors. Extra virgin olive oil can be passed through a clay-cellulose filter which will remove most of the sediment. Remaining sediment may be absorbed by the olive oil or collect at the bottom of the bottle.



False. Spain is by far the largest producer of olive oil.



False. Olive oil is classified by quality not geography. ‘Extra virgin’ is the highest quality of olive oil regardless of origin. Italy produces more than it consumes, most of what is sold as ‘Italian’ olive oil is imported and packed in Italy, then resold as Italian.



False. Olive oil pricing is commodity based. Bulk quantities are already factored in to the commodity pricing. The only way to reduce the price is to mix the oil with cheaper oils.



False. In the olive oil business the ‘F’ stands for ‘Fraud’. Fraud is a major problem. Any olive oil you purchase should look, smell and taste like olive oil. The price should be commensurate with commodity pricing. If it is too cheap - it’s not olive oil.



False. As far as olive oil is concerned ‘Pure’ is a misnomer that actually means ‘impure’. Olive oil sold as ‘pure’ is refined by a heat and chemical process. It is not natural and should not be confused with ‘virgin’.



False. Olive oil should not be refrigerated. Cold temperatures will cause the oil to go cloudy. Olive oil should be stored out of direct sunlight. Real extra virgin olive oil will maintain it’s properties for many months.



True. Olive oil is the most stable of oils, it resists temperatures of 320º - 392º (Fahrenheit) and is the slowest oil to decompose. Another advantage - olive oil impregnates fried foods less than other oils so it the calorie content is actually lower.



Score: 8 -10 = Excellent 5 - 7 = Good 3 - 5 = Needs Improvement 1 - 2 = Needs a lot of Improvement



Greg

Money Morning asked:


Two companies are dwarfing “big oil” in profit margins and reserves. They’re about to hand investors a double in the short run…

No one knows if the price of oil will continue breaking records - but one thing is certain:

The biggest oil companies are hardly the best oil investments.

Four of the six “majors”- Royal Dutch Shell, BP, Chevron and ConocoPhillips - have profit margins that fall below the S&P energy-stock average of 9.7%.

And of those four, Chevron and ConocoPhillips are the only ones whose shares are actually higher than they were a year ago.

The fact is that companies outside of the “Big 6″ are handing investors the best returns.

Two in particular stand out as potential triple-digit plays. The first is China’s largest producer of offshore crude and natural gas. It not only supplies the mainland’s thirst for energy, but it has a whopping with 2.6 billion barrels in reserves.

Its huge reserves are growing in value with every up tick in oil prices. Add in a dividend of $1.13, and this company’s prospects sing to both short- and long-term investors.

It also has one of the highest profit margins in the industry - with translates to stock appreciation, as you’ll see in a moment.

The second high-profit play is in Europe, with operations expanding throughout the globe. It’s the world’s leader in deepwater exploration technology, which means it spends significantly less time and money finding oil than its competitors.

That’s a major advantage - and it shows. It just trounced Wall Street estimates by 34.29% for the first quarter. And it pumps out a healthy 2% dividend.

This exclusive report gives the details on both and shows why they are two of the best oil plays available in this time of soaring prices.

The Most Profitable Oil Company… Period

No other oil company is nearly as profitable as Hong Kong-based CNOOC Ltd. The offshore oil and natural gas explorer has a jaw-dropping profit margin of 34.45%, more than quadrupling those of four supermajors - ConocoPhillips (6.75%), Royal Dutch Shell (8.35%), BP (8.40%) and Chevron (8.61%).

CNOOC has four oil production areas offshore China, as well as offshore oil facilities in Indonesia and certain upstream assets in regions, such as Africa and Australia.

As of December 31, 2007, it had about 2.6 billion barrels of reserves. And CNOOC’s proximity to mainland China and other emerging economies ensures that its oil doesn’t stay in the barrel very long.

You see, all it takes is a stroll down the street in China to see that demand for oil and gasoline is going to increase far faster than most U.S.-based analysts would ever believe - or understand.

“Nowhere is that more evident than China where I’m traveling now,” Money Morning Investment Director Keith Fitz-Gerald said recently while leading an investor’s tour of the Red Dragon. “Beijing alone is adding 1,500 cars a day. Across China, the number is obviously higher. The same is true in India, but to a lesser degree.”

[Editor’s note: As the economies of China and India soar, the investment opportunities in each have become staggering… though not all are winners. “The Essential Investor’s Playbook” lays out more than a dozen stocks that will best capture profits in both emerging economies.]

According to Fitz-Gerald, every investor must have a China strategy. And that especially holds true for the energy sector.

And CNOOC Ltd. is a prime candidate to fulfill both the “China” and “energy” portions of your investment portfolio.

Because let’s face it: China isn’t going to stop growing anytime soon. Incomes are rising and all the major automobile makers are setting up billion-dollar plants there.

Patient investors may be handsomely rewarded in the long-term, as CNOOC is uniquely positioned to capitalize on China’s thirst for oil for decades.

And given the weak dollar, CNOOC could also be on the prowl for acquisitions, which would further boost its earnings potential.

Going Deep on Petro Profits

A company can make all the money in the world, but it won’t turn a profit if it drains its wallet in the process - especially as oil prices climb.

Norway-based StatoilHydro ASA is an integrated company that’s involved in nearly every element of the oil and natural gas industries - a business model that saves hundreds of millions in outsourcing costs and adds just as much from multiple income streams.

Specifically, it produces, transports, refines, markets and sells oil and natural gas - both regionally and worldwide.

And that’s a major reason why StatoilHydro saw its year-over-year net income rocket 62% in the first quarter. The company also bested Wall Street’s first-quarter estimates by 34.29%, serving investors a 94-cents-per-share profit compared to its 70-cent forecast.

All totaled, Statoil has 7,000 kilometers of pipeline from the Norwegian continental shelf to Europe.

It’s now the world’s largest energy operator in waters more than 100 meters deep, producing an average of 1.7 million barrels of oil equivalent per day. It has proven reserves of more than 6 billion barrels of oil, has operations in 40 countries and is expanding aggressively to diversify internationally.

Statoil’s front-end operations are ubiquitous in northern Europe, where its network consists of about 2,000 Statoil-branded service stations, 470 tanker trucks and 99 depots spanning eight countries.

But more pertinent in the face of an energy crisis, StatoilHydro sends out one-third of its total daily output - about 600,000 barrels of crude and other fuels - to the United States.

[Editor’s note: A former head of research for Merrill Lynch released a “tell all” document today… detailing how to buy oil for just 25 cents a barrel… and cash it in for an outrageous short-term gain.]

In March, the company announced plans to spend as much as $2.1 billion on operations in Brazil and the Gulf of Mexico. It bought the 50% stake it didn’t already own in Peregrino, a heavy oil field in Brazil, and 25% of the deep water Kaskida discovery in the Gulf of Mexico, from the Texas-based Anadarko Petroleum Corp.

Statoil’s cost-effective operations are maximizing the record revenues it’s seeing from high oil prices. And its globally integrated operations ensure the company will generate more revenue streams and better returns for investors.

To read more click here

Investment news



Michael

YoungSexyThang asked:


The way I understood it was that high energy prices were hurting manufacturers, transportation, and consumers directly. Now, as oil prices decline, they say it is bad for the economy.
Please, how is it that low oil prices were good when prices were high and high prices are good when they are low?

Vivian

Gerrardo asked:


I see that prices for oil becoming very cheap. It is so good to have a car now days. So why do they cry about oil if they waste it like this?

Phyllis

ETF Planet asked:


It’s been a wild ride for Oil based ETFs over the last few months, especially for the MacroShares Oil Down ETF (DCR), which rises in price when the price of oil drops. Needless to say, DCR has been severely punished as oil prices have now cleared $130. On April 17th MacroShares issued a press release as follows: “The NYMEX light sweet crude oil futures contract for June closed at $114.36 on Wednesday, April 16th at 2:30. This marked the third consecutive business day that the reference price for MacroShares Oil Up and Down (UCR and DCR respectively) closed at or above $111. This triggered an early termination event for the securities. On July 3rd, a final distribution payment will be made to the UCR and DCR shareholders of record as of June 30th based on the underlying value of the Up and Down MacroShares Trusts. The underlying value of the trusts will be determined based on the June 25th closing price of the NYMEX light sweet crude oil futures contract for August.”

So what does this mean for investors of DCR? Basically Oil needs to drop below $120 for DCR to have any value for the distribution. The value for the shares will be based on the following forumla: ($120 - Crude) / 3 = NAV

So if you’re looking for a more conservative short play on crude oil, and with a longer timeframe than a few weeks, pass on DCR and look to shorting or buying puts on the USO instead.



Bernice

Duncan Freer asked:


Cut the arteries of business and they bleed oil. Anything that interrupts the flow of this precious black liquid is likely to send the world economies into freefall. So as nervous investors watched the price of oil climb to dizzying heights earlier this year, the fear that it would lead to an implosion of the world economy looked certain to become a reality.

In fact, it was the world banking system that went into meltdown, not the oil industry. In the mist of a recession, when the price of everything else seems to be going up, oil has actually fallen in price to a more sustainable level. Ordinary consumers have noticed it at the pumps, with the cost of petrol and diesel dropping dramatically in what started as a price war between outlets. What this price war actually reflected was the fall in oil price per barrel in the commodities markets. So the oil industry is still there, and they’re still recruiting.

Jobs in the oil industry are highly sought after. True, the recession has hit here as well, but mainly in the back offices and administration departments, rather than on the ground or in rigging. Oil rig jobs are still available, and companies, in their continuing search for more of the precious black stuff, have upped the ante considerably.

If you are an engineer, rigger or driller, there are still plenty of oil rig jobs to choose from. Noble Corporation is bringing five new oil rigs into production between 2009 and 2011, meaning a total of over 1,500 vacancies that need to be filled. The 2007 merger between Transocean and GlobalSantaFe resulted in a $33billion backlog of work. All of that needs to be completed, meaning more jobs in the oil industry, despite the dire news and continuing economic downturn in almost every other industry. In its current position, the oil industry looks set to ride out the recession in style.

In recent years, the driving forces behind the high demand for oil have been the rising stars of China and India. As their economies power up, their appetite for oil has grown exponentially. While China’s third quarter growth has slowed, the slowdown has been negligible in comparison with the screeching of financial brakes heard in the northern hemisphere. It still managed to notch up an impressive 9% growth rate - practically all of which is dependent on oil. The International Energy Agency predicts that China and India will need 300% more crude oil for their economies by 2030. That figure means more investment in location and extraction of existing and new oil fields, which in turn means more jobs in the oil industry.

These figures bolster the promise of a continuing boom time for international oil companies, who will carry on investing in exploration and new oil rigs. That means only one thing - more oil rig jobs, oil careers and greater job stability for the workforce. Factor into this equation the number of workers hired in the 1970’s who are now coming up to retirement, and you can see that now is a good time to be looking for jobs in the oil industries.



Lucille

VEERAMANI N asked:


The Saudis have announced enhanced production of oil. There is no shortage of oil world wide, but the Internayional prices have crosse USD.140.00/barrel. This does not satisfy the demand supply theory, then is it man made?Or is the cartel responsible for this situation? What are Indian Govt.’s effots for more oil exploration in India?

Thomas

Swampy asked:


Transportation costs are a factor, but there’s more to it… What more to it could there be? I suggested intimidated investors, but that’s not it. What reasons could you come up with for this model?

P.S. The inverse is also true, the Chicken company’s stock goes up as oil prices go down
This is a hypothetical situation.

Charlene

Ed Lathrop asked:


Although many people don’t realize it, open bidding at the New York Mercantile Exchange in New York City sets the price of crude oil. For all intents and purposes, this open bidding, or open outcry, is actually the same as an auction. The New York Mercantile Exchange, the Chicago Board of Trade, or any other futures exchange for that matter, is no different than a great big financial Ebay.

Oil Companies Setting High Prices

It is in vogue to think of rich, evil, oil companies setting high prices on their product, but actuality this is not what happens. It is true that oil companies participate in the bidding, but anyone is free to participate. Besides the oil companies bidding for crude oil, many investors/spectators are also involved in the process.

Fundamental and Technical Trading

When speculators, or companies who are hedging, bid in the open market on futures exchanges, they attempt to predict future prices by using two different types of indicators.

The first types of indicator speculators/hedgers will use are fundamental indicators. In other words, they attempt to determine what the given supply will be in the future for a certain product. They will also attempt to predict what the future demand will be for the same product. If they are accurate, they will be able know whether the price of this commodity will rise or fall.

The second types of indicator speculators/hedgers will use are technical indicators. With technical indicators, investors feel they can simply look at charts and predict whether the price of the commodity is rising or falling.

In the case of crude oil, some time ago fundamentals indicated that its price would be rising. However, there is some controversy about just how high the fundamentals tell us the price of crude oil should be right now.

As far as technical indicators are concerned, when the price of a commodity has gone on for a while in one direction or another, these indicators will no longer be useful because all they do is tell you which way the price is headed. They say nothing as to how far it should go.

The Tech Stock Boom

In the 1990’s, there was a tech stock boom. Very shortly into this boom, tech stocks became overbought. In other words, the tech stocks were not, in reality, worth the high price they were selling for. A year or so later, they became extremely overvalued. That didn’t stop their price surge though, because the price of tech stocks were increasing very rapidly, they were making money for people. So, more buyers kept coming into the market.

Tech stocks made millionaires out of a lot of people. All a speculator had to do was buy tech stocks, and then hopefully sell them before it was too late. After a few years had gone by, tech stocks were so expensive, new investors just couldn’t afford them. Without new buyers coming into the market, the price of the tech stocks stopped appreciating. When that happened many speculators saw no purpose in holding onto their tech stocks. So, naturally they started to sell them.

As you probably remembered, the tech stock market suffered a complete crash once selling became the trend. The NASDAQ tumbled from 5,000 to 1,100. During this time, fortunes were lost. Once the NASDAQ had settled around 1,150, the price of tech stocks had found their equilibrium. In other words, after bouncing around a bit they started to trade at their true worth.

This is the Crude Oil Price Boom

The crude oil market, which right now is trading at approximately $98 per barrel, looks exactly like the tech market boom just before its bubble burst. Other parallels can be drawn between the tech market bubble of the 90’s; the housing bubble of 2005-2006 and what the crude oil market is going through right now.

It looks very much like the price of a barrel of crude oil just has to hit $100. There is no real fundamental reason behind it except for it appears to be what the market psychology is dictating. Once it reaches $100 per barrel, I can’t see what possible indicator would tell anyone that this would be the time to invest in it.

While I, or no one else can predict the future; I can look at the past with the best of them. When I look at what’s going on in the crude oil market, I just can’t distinguish anything different from what happened to the tech stock market of the ’90s, and more recently the housing market.



Frances

Serene asked:


Why have oil prices rised so high and when will these become cheaper? Why is middle east becoming so greedy?

Theodore