Oil is the lifeblood of the global economy. The Peak Oil Theory is a theory that you must have heard. This theory stated that nearly all known oil reservoirs had been found. There are no more oil wells that have not been discovered or exploited. This means that the world’s oil supply is finite and limited, but the demand for it is increasing each year. This demand will increase with the rise of countries like India and China.
The economics of oil prices is simple. The world will see oil run out in the next two to three decades due to rising demand and decreasing supply. Oil prices will rise to $200 due to rising demand and decreasing supply in the next few years.
In 2008’s hot summer, crude oil prices rose from $70 per barrel to $140 within a matter of months. The 2008 stock market crash and the onset of the global recession halted this uptrend. The recession caused a drop in oil demand, but it was temporary. Demand for oil will rise once the global economy starts to grow again. Imagine driving your car at these oil prices. I doubt anyone would take that liberty. Until someone discovers a cheaper solution to oil, the global economy will remain dependent on the diminishing supply. Alternative energy? It is still in its infancy. There is no easy way to get oil. Crude oil prices will rise to $150-$200 per barrel after the recession ends.
This is something you need to be aware of as a trader. Trader always seek to profit from trends that last several months. An uptrend in crude oil prices can last several months or years. The traders who are able to position themselves for crude oil trading in 2010 will reap enormous profits.
Investing in oil companies can allow you to trade crude oil. They are already heavily invested. There are many options for trading oil stocks, ETFs, and mutual funds, but the best way to trade crude oil is to trade futures. Crude Oil Futures contracts can be traded on the New York Mercantile Exchange, NYMEX. You can learn futures trading in two months by trading paper futures contracts. Prepare for the oil shock in the coming years, which may begin in 2010!