It’s Time to Invest in Oil Again!

I told my readers to short oil when it was at $120 per barrel on April 23, 2008. I was a little early to the party, but oil did drop below $33 a barrel in December of 2008. Now, I think oil has bottomed and is about to head higher.

Here are just a few reasons why I think the time has come to consider investing in oil again:

• There are many potential geopolitical flashpoints around the world that could flare up at any moment and disrupt oil supply.

• Americans have forgotten about past high gas prices and are back to buying SUVs and forgoing the carpool.

• Crude oil prices held up in the face of the recent 12-year lows in the stock market. This is very bullish for oil.

• Most of the world’s cheap oil has already been discovered, and oil exploration companies are drilling in places that are harder to reach. This adds to their costs and results in higher oil prices.

• Soon we could see demand increase to a level that will start to exceed supply. Demand will grow in the years ahead as India and China continue to modernize.

While oil inventories are high right now, they may start to decline toward the end of the year. I suggest you start looking at investing in oil over the next few months and use big down days as buying opportunities.

If you invest in oil, keep an eye on the economy. If the current slowdown gets worse and lasts longer than expected, it could have a negative effect on oil prices. Currently, my technical indicators are pointing to higher oil prices in the near term.

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