Latest topics
Social bookmarking

Social bookmarking digg  Social bookmarking delicious  Social bookmarking reddit  Social bookmarking stumbleupon  Social bookmarking slashdot  Social bookmarking yahoo  Social bookmarking google  Social bookmarking blogmarks  Social bookmarking live      

Bookmark and share the address of forexgreenland - Forex forum,Forex training, Forex signals, Forex mgt accts on your social bookmarking website

Bookmark and share the address of Forexgreenland - Forex forum,Forex training, Forex signals, Forex managed accounts on your social bookmarking website

Who Wins When Oil Hits $200

Go down

Who Wins When Oil Hits $200

Post by Sean on Thu Jul 03, 2008 1:26 pm

Here's the thing: In the long-term, oil prices just promise to go higher.

It's simple.We can't create more oil. There's only a limited supply out there. In fact, some economists estimate that there may only be a 60-100 year supply of oil left in the earth. That means that no matter how much oil prices pullback in the short-term, gas prices are only going higher long-term.

The Few Winners in the $200 Oil Game

Okay, so the question is: Who will benefit from these sky-high oil prices in "currency land?"

If you can figure out who holds the oil and exports tons of it, then you can see who will benefit over the years. After all, the cost of pulling it out of the ground won't change nearly as quickly as the price increases.

With that in mind, I'd like to introduce you to the few countries that stand to profit as gas prices soar to US$5, US$6 and beyond.

As oil rises in price, money will literally pour into these countries. This huge influx of oil funds will stabilize their economies, build trade surpluses and attract foreign investors (because traders send their money flowing to sound, stable countries).

So without further ado, let's meet these oil-rich (and now cash-rich) nations...

America's Personal Gas Pump

First up: Canada - the United States' personal gas pump.

Our neighbors to the north are the United States' biggest oil suppliers. In fact, 99% of Canada's oil goes straight to the United States. Think Americans will lose the thirst for oil anytime soon? I don't think so. This gives Canada a huge edge going into the future.

Also, even without that distinction, Canada is already one of the largest suppliers of oil in the world. It's possible Canada has even more so than Saudi Arabia and the United Arab Emirates.

So as oil prices rise, oil importers from all over the world will want Canada's most valuable resource. Oil sales alone will dump cash into Canada's economy. And that's just oil revenue. Canada also has other commodities that will benefit the economy in the years to come.

You can easily make a straight investment in this oil-producing nation, simply by buying the Canadian dollar (or "loonie" as we say in the currency biz). The Canadian dollar (CAD) is right at the top of my "beneficiaries of US$200 oil" list. As Canada benefits from the rise of oil prices, so will their dollar.
Once the Laughing Stock Currency...
But Look at It Now

The next two oil-producing countries somewhat tie in my book: Mexico and Brazil.

Mexico is already a huge exporter of oil. In fact, in 2006 the country exported an estimated 1.68 million barrels of oil per day. Mexico also happens to be the third largest exporter of oil to the United States.

Notice: I keep mentioning the United States. That's because we manage to use nearly a quarter of the world's oil output every single day. So whatever country supplies the U.S. with oil has hungry customers for as long as they have oil to export to us.

In addition to oil, the Mexican economy has also stabilized recently. The Mexican peso - once the laughing stock of the currency world - is now strengthening because of the oil money flowing into Mexico. That puts the peso on my list of "oil beneficiaries."

The Non-Oil Using Oil Country
Unlike the rest, Brazil is usually not known for its oil reserves. In fact, Brazil has been making headlines for years because the country has found a way to wean the country off oil, using alternative bio-fuel sources instead.

However, Brazil recently struck it rich. The country discovered an oil find that could be the biggest oil field in the western hemisphere. So even if these initial reports are only half as accurate as they've been made out to be, it still forecasts a bright future for Brazil and its currency, the real.

Like Mexico and Canada, Brazil will trade their oil revenues for an even stronger economy. And of course, a stronger Brazil economy will benefit the Brazilian real.

The Often Forgotten Oil Currency
Here's one more "added bonus." While I don't normally cover this currency, I'd like to just make a brief mention of the Norwegian krone (NOK). Norway will also be a beneficiary of the rise of oil to US$200 a barrel. It's estimated that Norway exports an estimated 2.54 million barrels a day of oil.

Plus, over the years, Norway policymakers have been using those oil revenues to build up the local economy - including building a Sovereign Wealth Fund and one of the best pension programs in the world.

That makes Norway's economy a direct beneficiary of US$200 oil.

Okay that's it for the oil winners. Tomorrow, I'll give you a look at which currencies will tank when oil touches US$200 a barrel and beyond, so you know exactly which currencies to steer clear of in your long-term currency portfolio.


Number of posts : 68
Location : New York
Reputation : 0
Points : 30
Registration date : 2008-03-30

View user profile

Back to top Go down

Re: Who Wins When Oil Hits $200

Post by Sean on Mon Jul 07, 2008 6:21 am

Happy Independence Day Currency Traders!

Can you believe oil prices have more than doubled just since the last 4th of July? This time last year, oil was sitting at around US$67 a barrel.

Now we're all suffering with US$144 oil - and of course, US$4 gas.

It's fairly easy to see why. Every day, the worldwide global demand for oil is MORE than our worldwide supply. That means it's not a question of "if" oil prices head higher - it's "when." In fact, Goldman Sachs has already predicted oil could hit US$200 in the not-so-distant future.

When that happens, a handful of oil-exporting nations will dominate the global economy.

But I don't want to talk about the oil winners today. I'd like to introduce you to the countries - and currencies - that will suffer as oil continues to rise. If you're betting on higher oil, then these are the currencies that you DO NOT want to hold in your long-term portfolio.

Which Currencies Take Huge Hits
Due to $200 Oil?

As you can imagine, the nations that blow through oil the fastest will suffer the most. And if you import most of your oil, you'll just suffer more.

So of course, the biggest "oil loser" is the United States, and the U.S. dollar.

It has two reasons why it will likely go down in value as oil rockets higher. First of all, the U.S. uses 21 million barrels of oil each day. But we have to buy 14 million barrels of that oil from other resource-rich nations. So as oil prices continue to rise, the U.S. will have to fork over more cash to feed our oil addiction.

Also, expensive oil makes the dollar naturally cheaper. Let me explain. As you know, oil is priced in U.S. dollars. So as the dollar grows weaker, the oil producers naturally demand more dollars for their oil. The opposite is also true. When the dollar is strong, oil producers don't charge as much.

This gives oil and the dollar a mirrored effect. In other words, when oil goes up, the dollar tends to go down and vice versa. So you'll see the U.S. and its dollar (USD) suffer over the long haul if oil rises.

Don't get me wrong. Treasury Secretary Paulson, Fed Chief Bernanke or even their buddy across the pond, Trichet, could intervene in the short term and push up the dollar.

However, in time, things have to go back to their fundamentals. And right now, the fundamentals call for a long-term weak dollar and higher oil prices. This puts the U.S. dollar as one of the biggest losers in the $200 oil game.

It's Not Just the Buck that Will
Take Some Potshots

Another huge oil loser will be Japanese yen (JPY).

Japan has to import over 95% of their oil for their economy no matter how high oil prices are. That's even MORE than the U.S. imports. In fact, Japan will import 5.4 million barrels of oil this year, according to the 2008 Fact Book.

So they're feeling the pain greatly also. That puts them at the top of my list as well. So you'll see that economy (and their yen) struggle in the next few years as oil rockets higher.

Just to recap: The biggest "losers" in the US$200 oil game will be the United States and Japan. In reality, any country that's not a "net oil exporter" will be hurt. But in currency investing: It's always who gets hurt the worst and who benefits the most.


Number of posts : 68
Location : New York
Reputation : 0
Points : 30
Registration date : 2008-03-30

View user profile

Back to top Go down

Back to top

- Similar topics

Permissions in this forum:
You cannot reply to topics in this forum