This Crude Oil Secret Was Worth Keeping…

oil pumpMy friend Blair Morse really knows how to keep a secret. We just spent four days holed up in France for our editorial meeting, and he never said a word to me about this secret investigation he’s been on.

When I read his open letter, I was flabbergasted.

Now, I don’t use that word lightly. I’m not trying to make this investigation out to be more than it is. I’ve been on the researching and investigating side of a couple of stories in the commodities sector.

I spent a week in Denmark learning about an island that uses wind power as a currency. I flew 14 hours to South Africa to find out how the country’s mining industry was doing after all the power problems.

This was something I hadn’t heard.

So while we normally feature a guest article on Wednesdays, I had to share with you this letter in which Blair explains the investigation he’s secretly been conducting.

Let me set the scene for you…

Crude oil prices are climbing again. They were back above $100 a barrel even before yesterday’s $2 jump. And even at $100 a barrel, crude oil prices are still $30 higher than this time last year.

That’s a significant run higher. But the jump in prices is not entirely because of the U.S. dollar.

(Sign up for Smart Investing Daily and let me and fellow editor Jared Levy simplify the market for you with our easy-to-understand articles.)

As the U.S. dollar loses value, things priced in dollars get more expensive. This is inflation. But with things like gold and crude oil, traders push up prices even higher. There are two reasons why this happens. First, gold and oil are natural hedges against a falling U.S. dollar. What that means is that gold and oil are assets that help preserve your wealth and retain their value against inflation.

Second, if traders feel like these commodities are going to be more expensive in the future, they’re willing to pay a little bit more now to acquire more gold or crude oil.

We’ve seen both of these factors pushing crude oil prices higher. But they are only part of the reason prices have jumped 43% over the last year.

The other reason is China.

Let me give you a snippet of Blair’s letter to better explain.

According to reports out of China, there is limited oil supply left — and that number is falling fast.

Last November, Paul Ting, a Chinese energy consultant, told The Wall Street Journal:

The real story in China is that there’s massive shortages right now. China has experienced seven consecutive months of [fuel] inventory drawdowns. We’re talking about massive, massive drawdowns.

If the oil in China dries up, it could lead to economic meltdown…

Factories would close their doors. China’s now-infamous growth would come to a screeching halt. Millions of newly unemployed workers would fill the streets.

Chinese citizens would face severe fuel shortages and price shocks.

It’s a safe bet mass protests would follow…

Everything China’s worked for over the past 20 years could be lost.

The Chinese government is acutely aware of the dangerous game they are playing. Those massive fuel drawdowns can only last so much longer.

But Blair’s investigation found out what China’s planning to do about this supply shortage… how the country has been secretly building an oil colony that will dwarf all its other crude oil operations in places like Sudan and Libya.

He didn’t tell me personally what the Chinese have been planning. In fact, he’s only told one person about his findings. That’s how sensitive the situation is.

He told New Growth Investor editor Zach Scheidt.

China is already importing more than half of its oil, and consumption is expected to double from 4.3 million barrels a day in 2009 to 9.6 million barrels a day in 2011. It’s crucial that China finds more crude oil. This growing crisis is creating an opportunity for investors.

Read this letter from Blair for just how crazy this scene could get, and then learn how Zach can turn this crisis into a great chance at profits.

I think you’ll find that this secret was worth keeping…

Article brought to you by Taipan Publishing Group. Additional valuable content can be syndicated via our News RSS feed. Republish without charge. Required: Author attribution, links back to original content or

{jtagstpg} {authorstpg}

Other Related Sources:

  • Oil Prices Surge Above $100 a Barrel
  • How to Get the U.S. Dollar to Stop Stealing Your Commodity Profits
  • China Overreaching for Crude Oil
  • Greece May Avoid Restructuring; EUR Traders Ecstatic

    Source: ForexYard

    The euro has been a top performer against the other major currencies lately as investors have turned their attention to the potential for Greece to move beyond its debt concerns. Speculators have been largely betting that Greece may be able to bear its debt burden without restructuring and this has helped lift the 17-nation common currency regardless of its weak monthly performance.

    Economic News

    USD – US Dollar Sees Mixed Gains

    The US dollar halted its plummet against most currencies yesterday, with mixed gains seen versus the British pound, Japanese yen and Swiss franc. Positive news regarding Greece’s debt woes helped the EUR hold its ground against the USD’s resurgence and differences between the two regions’ fundamental data remains stark.

    The EUR/USD rose to a three-week high Tuesday, reaching upwards of 1.4415 on news that Greece may not require a debt restructuring. The GBP/USD slumped from its four-week high of 1.6553 to a current price just below 1.6470.

    The shift into riskier assets supports a variety of analyses which have called for a solid return to growth in the early summer months of Europe and North America, which is leading the way into these investment shifts. But weak fundamentals out of the US and other leading economies have some analysts a bit skeptical.

    Today, the United States is scheduled to release a series of significant data sets. The most impactful figure being published will be ADP’s non-farm employment change report, set to be released at 13:15 GMT. This figure above all others should be a solid gauge from which to view the impending NFP employment reports due to be released Friday.

    EUR – EUR Gains as Greece May have Dodged Bullet

    The euro has been a top performer against the other major currencies lately as investors have turned their attention to the potential for Greece to move beyond its debt concerns. Speculators have been largely betting that Greece may be able to bear its debt burden without restructuring and this has helped lift the 17-nation common currency regardless of its weak monthly performance.

    The EUR/USD pushed above a three-week high yesterday, reaching upwards of 1.4415 before flattening out in today’s morning session. Potential for a technical cap to get triggered near 1.4450 could push the pair lower later on in the day, but analysts are still looking for additional gains by the currency if the current risk sentiment holds. Market pessimists, however, are noting the increase in poor fundamentals out of most major economies as a sign that this risk appetite may not materialize.

    As for Wednesday, the euro looks to be continuing its gains against the greenback but with a technical selling point approaching fast. A busy trading session in the Pacific economies caused a stir early on today, but traders appear to still be favoring a move into higher yielding assets. Europe, however, will be largely absent from the calendar today with all eyes focused on the employment and manufacturing reports out of the US.

    JPY – Japanese Yen Drops as Moody’s Puts Japan on Path of Downgrade

    The Japanese yen took a sharp dive yesterday against most of the other major currencies after Moody’s Investor Services placed Japan up for a possible review that may result in a downgrade of its bond rating. After dropping to as low as 80.80 this week, the USD/JPY appears to now be moving upwards, recently climbing beyond 81.30.

    Yen traders have been weighing risk sentiment lately, attempting to decipher the direction of the economy during this news heavy week. With Friday’s Non-Farm Payrolls (NFP) ahead, much can be said about the increase in speculative shifts taking place in the market right now. Last week’s data provided a temporary bullish uptick for the island currency, but yesterday’s news from Moody’s has reversed much of this sentiment.

    Oil – Shifts in Growth Forecasts Lift Oil beyond $103 a Barrel

    Oil prices pushed beyond $103 a barrel today after investors viewed the recent downward correction as a natural process to help get prices in line with supply. This movement between $96 and $102 a barrel was representative of a market corrective sentiment to get speculation more in step with supply and demand. The upward movement in prices seen yesterday, according to the Organization of Petroleum Exporting Countries (OPEC), was a shift in growth forecasts which view oil consumption to be on the rise going into the second half of 2011.

    The decision point anticipated since Monday appears to have been reached, but technical forces appear to now be in play testing this recent jump. Whether oil traders decide to lift oil prices beyond their current high of $103.06 will depend on manufacturing and industrial growth figures out of the major global economies. Employment also appears to be a top priority in this growth sentiment and oil traders are eyeing this week’s NFP data out of the United States to verify their revamped growth schedule for oil prices.

    Technical News


    Yesterday’s solid close above the pair’s 50-day moving average should be taken as a bullish signal. The Momentum-14 indicator shows short term momentum is moving to the upside as the pair rises above its two week consolidation pattern. Resistance is found at 1.4490 followed by the May high at 1.4940. 1.4340 should serve as the initial support level followed by 1.4205 and the 100-day moving average at 1.4035.


    Cable received a strong bounce higher at a level that coincided with the rising trend line off of the May 2010 low. As such, momentum has swung back in favor of the pound and rising weekly stochastics support further gains. Resistance is found at 1.6520 followed by the April high at 1.6750. A breach here would target the August 2008 high at1.7040. To the downside, support comes in at 1.6330 and 1.6000, followed by the trend line at 1.6120. Below the trend line the March low at 1.5935 comes into play.


    The yen’s rally failed to breach the 82.25 resistance as well as the 100-day moving average before the pair turned sharply lower while making a significant close below the rising trend line from the May low. Falling daily stochastics point to further declines in the pair. Therefore traders may look to be short on the USD/JPY with initial support at 80.70 and 80.35, followed by the May low at 79.50. A breach here would expose the pre-intervention low at 76.10. A move to the upside and the pair may encounter initial resistance at the previous trend line which comes in at 81.95, followed by 82.25, and retracement targets from the April to May move at 82.50 and 83.25.


    In almost textbook like fashion, the USD/CHF rose as high as 0.8890, a level that coincides with the trend line off of the February high only to encounter resistance and plummet, ending the week at a new all-time low at 0.8464. This level should serve as initial support for the USD/CHF, followed by 0.8400. A retracement back to the falling trend line would offer traders better levels at which to enter the trend with a stop above one of the resistance levels near 0.8890 and 0.8945.

    The Wild Card


    Following a triangle consolidation pattern off of its May high the AUD/USD broke out above the upper consolidation line only to retrace lower before moving higher again. This is typical price behavior of a triangle pattern and forex traders may look to be long on the AUD/USD. A protective stop should be placed inside the triangle near 1.0600 with a target near the 1.1000 level.

    Forex Market Analysis provided by ForexYard.

    © 2006 by FxYard Ltd

    Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

    PMI Data Shows Slowing Manufacturing across the Globe


    Weak PMI numbers were reported from China, the UK and the euro zone while Switzerland was stronger. Traders are anticipating US PMI and payrolls data later this afternoon that could disappoint to the downside.

    China reported better than expected numbers at 52 on forecasts of 51.6, but the data from May is the lowest over the past 9-months. This highlights the slowdown in the Chinese economy after a series of interest rate hikes and other tightening measures Chinese officials have taken to slow the pace of economic growth and inflation rates.

    The euro is consolidating its recent gains following a disappointing manufacturing PMI reading of 54.6 on expectations of 54.8. Earlier the EUR/USD failed to move above 1.4450, the 50% retracement from the slide in May. A breach above 1.4450 could tack on another $0.015 to the pair. To the downside 1.4345 is the first support.

    Further brinkmanship is being played out in negotiations between the IMF, the EU, and Greece. The IMF refuses to release the next tranche of aid before funding guarantees are made by the EU, while the EU will not pledge funding until the IMF commits. As the two parties negotiate an agreement the market appears to have priced in a new loan package for Greece that at least buys additional time to work out a final settlement. Risks remain in the afternoon session of an off the cuff remark by an EU official that could send the euro lower, albeit temporarily.

    Sterling is lower following weak UK PMI data (52.1 on expectations of 54.2) with the GBP/USD falling briefly below 1.6400 before recovering to 1.6420. A previous attempt to establish a beachhead above 1.6500 failed and risks remain for further declines. The support at 1.6300 may be a likely target.

    The Swiss franc rebounded from yesterday’s weaker than expected GDP numbers after strong PMI data were released this morning. The USD/CHF traded at a new low of 0.8442 while the EUR/CHF fell back to 1.2180. The next support for the pair stands at Friday’s low of 1.2100.

    This afternoon risks run high for disappointing US ISM data as well as the ADP jobs report. Based on the stagnant GDP growth in the US as well as a slowdown in global manufacturing (see the above Chinese, EU, and UK PMI numbers above) the USD could receive a bid in the afternoon trading session.

    Read more forex trading news on our forex blog.

    Australian GDP Contracts 1.2%; AUD Shrugs, Continues Climb


    The Australian Bureau of Statistics released its gross domestic product (GDP) report this morning, revealing a 1.2% contraction in its national economic growth. The figure has so far had little effect on the value of the Australian dollar (AUD) considering the news happening elsewhere.

    With concerns about employment and manufacturing growth in the United States, the potential for Greece to dodge a debt restructuring, and a possible downgrade of Japan’s bond rating by Moody’s, a downtick in Australia’s GDP was hardly significant enough to shift investors away from the higher yielding Aussie. For now, the AUD appears to have simply shrugged off the news and continued its bullish hike.

    Read more forex trading news on our forex blog.

    Moody’s Places Japan in Path of Bond Downgrade


    Moody’s Investor Services may end up placing Japan’s Aa2 local and foreign currency bond rating up for review this month; a move which has placed significant strain on the value of the Japanese yen. The move by Moody’s comes just days after the Fitch ratings agency downgraded its debt outlook for Japan.

    The JPY was recently seen plummeting against several of its currency rivals as traders anticipate a shift in value for their yen holdings. A Moody’s report noted that faltering industrial data and a dovish response by the Bank of Japan (BOJ) to address debt has instigated a review of Japan’s bond rating in lieu of its ability to effectively tackle a deficit reduction.

    Read more forex trading news on our forex blog.

    Deteriorating US Economic Data


    Yesterday’s US consumer confidence survey, manufacturing numbers, and housing data all showed sharp drop offs from their previous readings. However, the negative economic data was largely ignored in the FX markets as traders chose to focus on events in the euro zone and gains in equity markets. Today’s ISM data may indicate a slowdown in US economic growth with further evidence coming on Friday from the monthly jobs report.

    Today’s Economic Data Releases:

    GBP – Manufacturing PMI – 08:30 GMT
    Expectations: 54.2. Previous: 54.6
    After a respectable run for the pound during the previous week the rally has stalled, particularly in the Cable where the pair made three unsuccessful attempts to form a beachhead above the 1.6315 mark. A close above this level would target the April high of 1.6745. To the downside, initial support is found at 1.6300 followed by the rising trend line off of the 2010 May low which comes in today at 1.6120.

    USD – ADP Non-Farm Employment Change – 12:15 GMT
    Expectations: 177K. Previous: 179K.
    The ADP report has a low success rate of predicting the jobs report from the Department of Labor. However, a strong ADP report may feed into USD selling today.

    USD – ISM Manufacturing PMI – 14:00 GMT
    Expectations: 58.1. Previous: 60.4.
    A pullback in US economic data was apparent yesterday but was largely ignored by FX traders. Today market participants may look past the euro zone crisis and focus on the slowdown in the US economy. A sharp decline in today’s ISM data may cause some economists to scale back their Q2 GDP estimates and induce a bout of USD buying. EUR/USD support comes in at 1.4345 off of the May 20th high followed by 1.4130. To the upside the overnight high at 1.4440 is the first resistance level. A break here opens the door to 1.4590 and1.4750.

    Read more forex trading news on our forex blog.

    Forex Economic News Release Calendar: June 1, 2011


    June 1, 2011 – Economic News Releases – Times GMT

    01:00 Chinese Manufacturing PMI
    01:30 Australia GDP Report
    02:30 Chinese HSBC Manufacturing PMI
    07:15 Switzerland Retail Sales
    07:50 Eurozone Manufacturing PMI
    08:30 United Kingdom Manufacturing PMI
    12:15 United States ADP Employment
    14:00 United States ISM Manufacturing

    Economic Calendar