{"id":63199,"date":"2014-11-05T23:10:44","date_gmt":"2014-11-06T04:10:44","guid":{"rendered":"http:\/\/countingpips.com\/?p=63199"},"modified":"2014-11-05T23:10:44","modified_gmt":"2014-11-06T04:10:44","slug":"how-you-could-profit-from-the-crude-oil-arm-wrestle","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2014\/11\/how-you-could-profit-from-the-crude-oil-arm-wrestle\/","title":{"rendered":"How You Could Profit From the Crude Oil Arm Wrestle"},"content":{"rendered":"
November 5, 2014<\/div>
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By MoneyMorning.com.au<\/u><\/a><\/p>\n

One of the world’s biggest games of ‘chicken’ just stepped up a notch.<\/p>\n

Depending on who blinks first, there will be huge implications for your wealth.<\/p>\n

It’s the biggest story in the financial markets today — but because the mainstream press has a five-minute attention span, you might have missed it.<\/p>\n

Worse, you might have caught this story, but fallen for these jokers’ spin that there’s no way to profit from its fallout.<\/p>\n

They’re dead wrong. When titans clash, you can reap the benefits. <\/p>

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The game of chicken we mentioned is the arm wrestle over the price of crude oil<\/strong><\/a>.<\/p>\n

This play has many characters — some shadier than others — but for the sake of simplicity, let’s focus on the two lead actors, Saudi Arabia and the United States.<\/p>\n

The Saudis have been cutting the price of crude oil<\/strong> in markets around the world for the past four months.<\/p>\n

This has been their ballsy response to the downward pressure on the crude price from millions of barrels of newly drillable American oil.<\/p>\n

 The Saudi strategy seems to be one of protecting market share at all costs. In their view, if that means lower export earnings, so be it. <\/p>\n

For investors, this is uncharted territory. University economics professors are up in arms about Saudi Arabia’s irrational behaviour.<\/p>\n

But the Saudis are playing a long game here. American producers suffer more from lower prices than the Saudis do. The Sheikhs of the Persian Gulf are trying to run Uncle Sam out of business.<\/p>\n

That’s bad if you’re a US shale oilman. But if you’re an Aussie investor? You can play to win… <\/p>\n<\/p>\n

Infernal affairs?<\/h2>\n<\/p>\n

This week, the arm wrestle stepped up a notch.<\/p>\n

Saudi Arabia just cut prices for crude sold to the US. On Monday, prices on the New York Mercantile Exchange (Nymex) sank 2.2%, to US$78.78 per barrel. That’s the cheapest oil has been in more than two years.<\/p>\n

These charts tell the story of why the Saudis are behaving this way. As America’s shale bounty has added more than 3 million barrels per day to the world’s oil supply, the Saudis have faced stiffer competition for their product. <\/p>\n

<\/a>
\nSource: The Wall Street Journal<\/em>
\nClick to enlarge<\/a><\/em><\/div>\n<\/p>\n

Most of the organs of the mainstream media are touting this as a diabolical state of affairs. They’d have you believe that high oil prices<\/strong> make the world go round.<\/p>\n

We see it differently.<\/p>\n

As we told you yesterday, bad news sells newspapers. But it doesn’t necessarily teach you anything useful — or help you prepare to make an investment.<\/p>\n

The tumbling oil price<\/a> will throw up winners. In a market like this, a little common sense can take your investments a long way…<\/p>\n<\/p>\n

How you could profit<\/h2>\n<\/p>\n

The clearest link most Aussies make with the gyrating price of crude oil is the effect it has on the cost of filling up their car.<\/p>\n

Sure, petrol prices have a remarkable knack for rising when the value of crude increases, and tracking sideways after it plummets. A cursory glance of the tabloid opinion pages can tell you that.<\/p>\n

But the mighty arm wrestle playing out on the Nymex can overwhelm petrol retailers’ pricing power.<\/p>\n

According to the economics team at the Commonwealth Bank of Australia [ASX:CBA]<\/strong>, last week the pump price fell by 5.7 cents per litre, the biggest weekly fall in over five months.<\/p>\n

If this trend continues, it will put more cash in people’s pockets. For the typical family, these savings aren’t huge, but they’re real. And especially in the lead-up to Christmas, every little bit helps.<\/p>\n

The falling price at the pump — and just as importantly, the confidence boost it gives people — may have contributed to September’s surprise 1.2% jump in retail sales. That means Aussie retail stocks could be in for a bumper end to 2014.<\/p>\n

But higher retail spending is only one side of the ledger when oil prices fall. <\/p>\n

Australian agricultural producers have a ravenous appetite for energy.<\/p>\n

As their sales rise over time — as we’ve forecasted for some exciting Australian Small-Cap Investigator<\/a><\/em> stock tips — lower energy costs could meaningfully bolster their profits.<\/p>\n

If the Saudi\/US arm wrestle continues, it could give those two sectors a real ‘shot in the arm’.<\/p>\n

Forecasting oil prices is difficult at the best of times. That’s why you should know that our Resources Analyst, Jason Stevenson, has just unearthed four energy stocks that could skyrocket<\/a> regardless of how the crude oil arm wrestle plays out.<\/p>\n

It’s a resources investor’s dream. And with the pointers we’ve provided, you have the playbook for strong potential gains.<\/p>\n

Cheers,<\/strong><\/p>\n


\n Tim Dohrmann+<\/a>
\n Editor, Money Morning<\/em><\/strong><\/p>\n

Join Money Morning on Google+ <\/u><\/a><\/strong><\/p>\n

The post How You Could Profit From the Crude Oil Arm Wrestle<\/a> appeared first on Stock Market News, Finance and Investments | Money Morning Australia<\/a>.<\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\nBy MoneyMorning.com.au<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au One of the world’s biggest games of ‘chicken’ just stepped up a notch. Depending on who blinks first, there will be huge implications for your wealth. It’s the biggest story in the financial markets today — but because the mainstream press has a five-minute attention span, you might have missed it. Worse, you […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-63199","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/63199","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=63199"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/63199\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=63199"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=63199"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=63199"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}