OPEC Maintain Production Level – Time to Make Money

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Mar 16 2007
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Despite calls to pump more oils into the market that shows a tightening supply, OPEC (Organization of the Petroleum Exporting Countries) ignored the concerns and decided to keep production at current level. With such decision, it is estimated the oil prices will have only one way to go during the coming spring in U.S. – UP.

Retail gasoline prices in the United States have been rising since the beginning of the year and reached about $2.60 a gallon on average last week, nearly 40 cents more than in January. Economists are pretty sure the price will shoot up to $3.00 a gallon soon.

Oil prices have settled around $60 a barrel in recent months and members of the OPEC seem satisfied with that level. In 2006, OPEC which pumps about a third of the world’s crude oil cut its production levels twice to prevent prices from falling below $50 a barrel.

“We are watching developments on world stock markets to assess their possible impact on the global economy and, in particular, on energy demand,” said Mohamed bin Dhaen al-Hamli, OPEC’s president and the oil minister from the United Arab Emirates.

Consumers in developed countries can expect another summer of high gasoline prices and stiff energy bills with the solid demand for the black gold. On the other hand, consumers in “developing” countries such as Malaysia who created unsatisfaction amongst the people with the fuel-hike in 2006, any further hike will create dilemma to the government who is speculated to call for a snap election very soon.

Anyway, with such perception that the supply is tight, it’s only logical to look at the prospect of how to make money from energy-relaated stock counters.

Some of the oil-related stocks to be focused include:

  • EOG Resources, Inc. (NYSE: EOG, stock) – explores, develops, produces and markets natural gas and crude oil primarily in major producing basins in the United States of America (United States), Canada, offshore Trinidad, the United Kingdom North Sea and other international areas.
  • Transocean Inc. (NYSE: RIG, stock) – primary business is to contract these drilling rigs, related equipment and work crews primarily on a day-rate basis to drill oil and gas wells – specializes in sectors of the offshore drilling business with a focus on deepwater and harsh environment drilling services.
  • Schlumberger (NYSE: SLB, stock) – an oilfield services company, supplying technology, project management and information solutions.
  • GlobalSantaFe Corporation (NYSE: GSF, stock) – an offshore oil and gas drilling contractor, owning or operating a fleet of 61 marine drilling rigs, charges on a daily rate basis.
  • EnCana Corporation (NYSE: ECA, stock) – is a holder of natural gas and oil resource lands onshore North America.
  • Halliburton Company (NYSE: HAL, stock) – an oilfield services company and a provider variety of services, products, maintenance, engineering and construction to energy, industrial and governmental customers.
  • Valero Energy Corporation (NYSE : VLO, quote) – owns and operates 18 refineries located in the United States, Canada and Aruba that produce refined products, such as reformulated gasoline (RFG), gasoline meeting the specifications of the California Air Resources Board (CARB), CARB diesel fuel, low-sulfur diesel fuel and oxygenates (liquid hydrocarbon compounds containing oxygen).

# TIP: If you decided to do option trading, remember to buy option with time-value of at least six-months expiration.

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