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The Oil and Energy Price Thread

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MORE OIL CHARTS

 

Dec.2006 (X or Z)

Barcharts ........... : http://www2.barchart.com/chart.asp?sym=CLZ6

Ino .................... : http://quotes.ino.com/chart/?s=NYMEX_CL.X06

Access Trading..... : http://www.accesstrading.com/charts.php (use: CLX2006 )

TFC/TradingCharts : http://futures.tradingcharts.com/chart/CO

 

Quotes/Options etc : http://www.bohlish.com/#FUTURES

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Monday:

 

Oil climbing FAST, clawing back those losses from friday

 

Charts : WTI : Brent/OILB

 

- -

Crude Oil Rises After Leak Discovered in Russia's Main Pipeline to Europe Crude oil rose after the Russian government reported one of the nation's main oil links to Europe leaked near the Belarus border, possibly cutting supplies from the world's second-largest exporter.

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ENERGY RISING, not just oil

 

The EEI said last week that the U.S. set a record for electricity demand for the week ending July 22. The Energy Department last week surprised the market by reporting that U.S. inventories of natural gas shrank by 7 billion cubic feet. Supplies typically build during summer.

 

Still, the country's natural gas inventory is well above historical levels at 2.76 trillion cubic feet. The five-year average for this time of year is 2.27 trillion cubic feet.

 

Analyst Dan Lippe of Houston-based Petral Worldwide believes that, barring any major hurricane damage to platforms and pipelines, natural gas prices could fall sharply in September. "You will see (U.S.) storage facilities full well before the last week of October," Lippe said.

 

Light sweet crude for September delivery rose $1.16 to settle at $74.40 on the New York Mercantile Exchange. September Brent crude futures at London's ICE Futures exchange rose $1.76 to settle at $75.15 a barrel.

 

Oil prices have been choppy in recent weeks, but BNP Paribas Commodity Futures broker Ric Navy said the market could be setting up for a big move up.

 

"The longer you go sideways, the bigger the breakout when it occurs," Navy said. "And at this point, the long-term trend is still higher."

 

Navy said traders could easily become more anxious in the weeks ahead, with the Gulf of Mexico hurricane season expected to pick up and the nuclear standoff between the West and Iran expected to come to a head in late August.

 

The U.N. Security Council passed a resolution Monday giving Iran until Aug. 31 to suspend uranium enrichment or face the threat of economic and diplomatic sanctions. Iran immediately rejected the council's demands, which were watered down from earlier drafts because of Russian and Chinese demands.

 

...MORE: http://www.chron.com/disp/story.mpl/ap/business/4085085.html

 

2/

 

"Prices have moved up ... with traders concerned over reports of a serious oil spill on the Druzhba pipeline, which ships over 1.2 million-1.4 million barrels per day of crude oil to Europe," said Barclays Capital analyst Kevin Norrish.

 

Oil prices also gained after the UN Security Council overnight tightened the screws on Iran over its nuclear program, ordering Tehran to halt uranium enrichment work by August 31 or face possible sanctions.

 

But the text stopped short of an immediate threat of sanctions, which have been opposed by Russia and China, and said punitive action would have to be the subject of further debate.

 

Security analysts have said that in the event of sanctions, Iran might retaliate and block the Strait of Hormuz, which is a crucial outlet for oil shipments to Japan, the United States and Western Europe.

 

Iran is the world's fourth-biggest producer of crude oil and exports around 2.7 million barrels per day.

 

...MORE: http://www.news.com.au/business/story/0,,1...2-31037,00.html

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Oil: It's All About Supply

Paul Maidment, 05.12.06, 12:00 PM ET

 

New York - Energy traders saw more evidence Friday, as if it were needed, of how supply threats are driving oil prices at a time when the demand-supply balance remains tight.

 

Crude-oil futures prices on Friday initially gave up the $3-per-barrel gains of the past week following publication of the International Energy Agency's monthly oil report, which said high prices were at last starting to cut into consumption. But prices rebounded after separatists in Nigeria, Africa's largest oil producer, threatened to destroy a $13 billion natural-gas export plant in the Niger Delta, and reports came in of a fatal explosion close to Lagos attributed to oil smugglers attempting to tap into a pipeline.

 

On Friday morning, U.S. light crude oil was trading in New York at around $73 per barrel, with London Brent crude a tad higher. U.S. crude hit a record of $75.35 in April, driven by tensions over Iran's nuclear ambitions and supply concerns in Nigeria, where attacks on pipelines and an export terminal this year have halted about a fifth of the country's oil output. Kidnappings of oil workers there have been frequent.

 

Shares in oil majors--such as Exxon Mobil (nyse: XOM - news - people ), Chevron (nyse: CVX - news - people ), ConocoPhillips (nyse: COP - news - people ) and BP (nyse: BP - news - people )--were similarly volatile in New York trading.

 

The IEA's latest monthly Oil Market Report attracted wider attention than usual because it made a sharp cut in its forecast for the growth in world oil demand for the year from 1.47 million barrels per day to 1.25 million barrels per day, saying that high prices are at last cutting into global energy demand, including in the U.S.

 

The agency, which advises 26 industrialized countries, is now forecasting that the world will consume 84.83 million barrels per day this year--200,000 barrels per day less than previously forecast. That would reduce this year's annual consumption growth to 1.5%, less than the forecast growth of the global economy.

 

As well as an easing of demand growth in the U.S., the agency forecasts that that the world's other oilaholic, China, will decrease its appetite by 15,000 barrels per day. That would still leave it increasing its consumption for the year by 5.3% to 6.9 million barrels per day.

 

The IEA also cut its estimates for oil demand in the world's second-largest producer, Russia, and in the other former Soviet states, as larger than expected exports suggested less was being consumed at home.

 

Remember, though, that the world is just using more oil less rapidly. It is not using less oil.

 

As the world economy continues to grow, the demand-supply balance for oil remains tight, with little spare capacity. The swing supplier to world markets, the members of the Organization of Petroleum Exporting Countries, have been pumping more oil. In April, OPEC increased output by 485,000 barrels per day, to 30.04 million barrels per day, driven by increased production in Iraq. But at best, the members of OPEC have less than 2 million barrels per day of space capacity left, compared with more than 7 million barrels per day in 2002.

 

So, even if the demand pressures ease slightly as the IEA forecasts, and the increase in supply it has detected--up 485,000 barrels per day in April, thanks to a turnaround in production from Iraq and more pumping in the U.S., China, Russia and central Asia--remains steady, supply worries will continue to spook energy traders, as Friday's news from Nigeria confirms.

 

-FROM: http://www.forbes.com/home/columnists/2006...pm_0512oil.html

 

= =

 

WED: Crude inventories down more than expected

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This is interesting from Iran-Daily.Com

 

Aug. 4--Iran, the second largest oil producer within the Organization of Petroleum Exporting Countries (OPEC), said Friday that crude oil prices may touch $100 a barrel on winter demand and geopolitical concerns, according to AFP.

 

“There is still a possibility of crude reaching $100 a barrel due to geopolitical problems worldwide and peaking of winter demand,“ Iran’s Deputy Oil Minister Hadi Nejad-Hosseinian said, according to Press Trust of India.

 

Asked by reporters if Iran would stop oil exports in the event of an attack by the United States over its suspected nuclear program, Nejad-Hosseinian replied, “I don’t think so.“

 

http://www.iran-daily.com/1385/2628/html/economy.htm#s164292

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That's Prudhoe Bay related, that move...

 

BP to Shut Down U.S.'s Largest Oil Field; Prices Jump (Update9)

Aug. 7 (Bloomberg) -- BP Plc is shutting Alaska's Prudhoe Bay oil field, the largest in the U.S., because of pipeline corrosion and a leak, cutting supplies and increasing criticism of the company's safety record in its biggest market.

 

Oil rose as much as 2.6 percent and shares of London-based BP, the world's second-largest publicly traded oil company, lost 2 percent. Owners of the field, accounting for 8 percent of U.S. output, include Exxon Mobil Corp., ConocoPhillips and Chevron Corp. The shutdown may take days to complete, said Toby Odone, a BP spokesman in London.

 

Chief Executive Officer John Browne already faces a grand jury probe for an earlier Alaska spill, charges of market manipulation in the U.S. propane industry and fines from a Texas refinery blast that killed 15 workers. BP, which gets 40 percent of its sales from the U.S., last month said it will boost spending there to improve safety and maintenance.

 

The Alaskan shutdown ``will prompt further questions about BP's safety procedures,'' said Ivor Pether, who helps manage about $15 billion at Royal London Asset Management, including BP shares. ``It will have a big impact on earnings if it's shut down for a long period of time but they absolutely have to do it.''

 

Prudhoe Bay accounts for about 1 percent of BP's annual earnings, Pether said today in an interview. Higher prices may offset the effect of lost output, he said.

 

`Big Effect'

 

It may take ``some months'' for BP to replace at least 3 miles of pipelines in Alaska, Citigroup Inc. analysts including James Neale in London, said today in a research note. Odone declined to comment on the Citigroup estimate.

 

Crude oil for September delivery rose as much as $1.91 to $76.67 a barrel in after-hours trading on the New York Mercantile Exchange, and traded at $76.20 at 12:57 p.m. London time. Oil reached a record $78.40 a barrel on July 14.

 

BP shares fell as much as 14.5 pence to 621.5 pence in London.

 

- -

`Bad News'

 

Some 400,000 barrels a day of production is being shut, BP spokesman Ronnie Chappell said. The company doesn't know when the pipeline will be repaired, Chappell said.

 

A pipeline that leaked four to five barrels of oil was shut down at 6:30 a.m. Alaskan time Sunday, BP said in a statement. BP owns 26.36 percent of the Prudhoe Bay field. Alaska provides about 10 percent of BP's worldwide oil production.

 

``It's just another long line of bad news for BP,'' Nunan said.

 

Exxon Mobil, the world's largest publicly traded oil company, owns about 36 percent of Prudhoe Bay, according to its Web site. Company spokeswoman Susan Reeves declined to comment on the field's closure or the effect on the Irving, Texas-based company.

 

Houston, Texas-based ConocoPhillips, the No. 3 U.S. oil company, owns 36.1 percent of Prudhoe Bay. San Ramon, California- based Chevron, the No. 2 U.S. oil company, owns about 1.2 percent and Denver, Colorado-based Forest Oil Corp. has 0.02 percent.

 

@: http://www.bloomberg.com/apps/news?pid=206...&refer=home

 

= =

 

BP might be a buy here

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I was looking to nip it for a very short term trade- that's all

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whilst serching for a graph of the copper futures curve, came acrooss thies

 

Why Have Oil Prices Risen?

Jacob Wellendorph Ejsing, John Hydeskov and Palle Bach Mindested, Market Operations

http://www.nationalbanken.dk/C1256BE9004F6...;file/kap04.htm

 

a well written, lucid and dispassionate article with some interesting graphs

http://www.nationalbanken.dk/C1256BE9004F6...6;file/056a.gif

http://www.nationalbanken.dk/C1256BE9004F6...ile/052ibox.gif

http://www.nationalbanken.dk/C1256BE9004F6...36;file/055.gif

 

 

CONCLUDING REMARKS

Looking forward, two key questions are apparent.

 

Firstly, will the strong growth in global oil demand continue? Curbing demand growth in the USA and China would require either a slowdown in economic growth, the implementation of energy-saving measures, or restructuring in favour of alternative energy sources.

 

Secondly, will the OPEC countries be able to boost investments in production capacity? Investing in new extraction capacity entails not only financial risk, but also other significant risks related to the continued geopolitical tensions in the Middle East, where most of the world's demonstrated oil reserves are found.

 

Both futures prices and explicit expectations among market participants point to sustained high oil prices in the years to come. Since global production is close to its capacity limit, the estimates are, however, subject to much uncertainty and disruptions caused by e.g. natural disasters or military conflicts could potentially have drastic price implications in the coming years.

 

ps anyone know of a graph of the cu futures curve?

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U.S. light crude for September delivery slumped $2.35 to $74 a barrel on the New York Mercantile Exchange, a decline of around 3 percent.

 

"When oil comes down the market does tend to act better as an inflationary play," Hyman said.

 

= =

 

PRESS SPIN ...explaining the move

 

So thought there was manipulative buying at the low, to keep confidence alive.

In any case, the Press does its usual job of "pinning news on the move":

 

Relief on Wall Street ... Aug 10: 6:26p

Major gauges manage gains as investors take in falling crude oil prices, arrests in British terror plot.

(more): http://money.cnn.com/2006/08/10/markets/ma...wyork/index.htm

 

Funny that:

The disruption of air travel becomes good news, becauseit reduces flying, and hence demand

for jetfuel, crude falls. I doubt this will last long, and if it does, there will be some negative knock-on

effects of reduced travel.

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FUTURES CURVE ?

 

Seeking charts, found these:

 

The Long-dated Price has risen dramatically:

futures.jpg

source: http://www.theoildrum.com/story/2006/3/2/234845/7384

 

People once thought:

The view was very precise, in that the long-term oil price was generally put as being between $18 and $21 per barrel. Indeed, the market’s perception of where to place the back end of the crude oil futures curve very rarely strayed outside that $18 to $21 interval over the whole period from 1986 to 2002. The $18 to $21 range became the touchstone for views of what represented normality, and any hypothesis that suggested prices could be higher than that range was considered heretically abnormal. Governments thought in terms of that range, as did financial markets.

 

Relative to the long months, the spot price is vey "whippy":

ComAndEnergy04.gif

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Do you really think there is any point charting the oil price - its so volatile due to supply constraints? One piece of news leads to a rapid decline and then suddenly something else leads to a rapid rise. As you know the long-term trend is unremittingly UP.

 

"According to OPEC, in June 2006 Russia extracted 9.236 million barrels of oil, which is 46,000 barrels more than Saudi Arabia. The statistics also showed that Russian production in the first half of this year increased to 235.8 million tons, a year-on-year improvement of 2.3 percent.

http://www.mosnews.com/money/2006/08/23/russiaoil.shtml

 

Good News? Not according to Jeffrey J. Brown (westexas) on the oil drum:

 

http://www.theoildrum.com/story/2006/8/23/9110/82030#more

I assume that most media outlets that report the captioned story by the Moscow News would describe it as good news regarding Russian oil production. What the Moscow News is not reporting is that current Russian production is 2.8% below its December level. As I outlined in a recent article regarding net oil exports, "Net Oil Exports Revisited," (http://www.energybulletin.net/19420.html), I estimate that oil exports from the top 10 net oil exporters are probably now falling at a double digit annual rate. The captioned article provides additional evidence of the decline, since the June production number is below the May (EIA) production number for Russia.

 

With that in mind as I don't have the time for trading I just hold a few oil stocks: Dana Petroleum DNX,Soco SIA,IEC and AEX. I have hedged these with a spread-bet sell on British Airways (eventually a bomber will get through or people will get so fed up with security they will stop flying), Barratt and Northern Rock

 

I just can't ever see oil going below $60 a barrel again (famous last words).

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YES. Charts can be useful.

 

This one, suggests to me that Crude has at least a little further to fall

 

WTI Crude Oil (WTIC) ... update

 

0cht2vt5.png

 

I might think alot lower, but the Oil shares are behaving as if a low is nearby

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YES. Charts can be useful.

 

This one, suggests to me that Crude has at least a little further to fall

 

WTI Crude Oil (WTIC) ... update

 

0cht2vt5.png

 

I might think alot lower, but the Oil shares are behaving as if a low is nearby

 

And you were right. But hang on is that a tropical depression heading towards the gulf I see?

Tropical Depression 6

 

Good Peak Oil BBC radio program tonight

 

BBC Peak Oil

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by the time the new oil is online, demand will have grown enough to consume it easily

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HELPS FOR THE NOVEMBER ELECTION--

 

Oil Prices Settle Near Six-Month Low As Worries About Supply Threats Ease

 

 

WASHINGTON (AP) -- The likelihood of finding $2-a-gallon gasoline in some parts of the U.S. is increasing by the day. The nationwide average at the pump is already below $2.50, and with a huge decline in oil and gasoline futures on Tuesday analysts say the outlook for motorists is only getting better.

 

 

"We'll see sub-$2.25 a gallon retail (prices) by October," said Tom Kloza, director of the Oil Price Information Service, adding that prices below $2 can already be found in Kansas, Missouri, South Carolina and other states.

 

Oil prices sank by more than $2 a barrel Tuesday to settle near a six-month low as worries about supply threats eased and signs of economic weakness in the U.S. signaled a potential cooling of energy demand.

 

The selloff brought crude oil futures to a six-month low, and helped weigh down already sinking gasoline prices.

 

"The real-time fundamentals of supply and demand are bearish," said Societe Generale commodities analyst Mike Guido.

 

Global inventories of crude oil are rising and in the U.S. -- the world's biggest energy consumer -- demand is tapering off. "There are signs that the housing market could have a bigger impact on the economy going forward," he said.

 

Moreover, pre-summer fears that hurricanes would disrupt Gulf of Mexico oil production have so far not materialized and speculators who had once helped to drive prices higher are now making bets on further declines.

 

While the market's psychology has clearly shifted, traders remain cautious about the West's diplomacy with Iran over its nuclear program, though they are increasingly less fearful than they once were that Iran will pull oil off the market.

 

Light sweet crude for October delivery fell $2.14 to $61.66 a barrel on the New York Mercantile Exchange, where gasoline futures tumbled 7.58 cents to $1.5038 a gallon.

 

It was the lowest close for front-month crude futures since March 21, when oil settled at $60.57. Oil prices have fallen 20 percent from a record settlement of $78.40 a barrel on July 14.

 

Also influencing trade, analysts said, was the market's preparation for a shift in the gasoline contract. At year's end, the unleaded gasoline contract the market has traded since 1983 will be replaced by a futures contract known as the reformulated gasoline blendstock for oxygen blending, or RBOB, which is already being traded actively on Nymex.

 

The move stems from the refining industry's decision to introduce ethanol as a substitute for methyl tertiary butyl ether, or MTBE, in summer blends of gasoline. The unleaded gasoline contract had been reformulated for summer with MTBE.

 

The Organization of Petroleum Exporting Countries confirmed traders' suspicions about the impact of a slowing economy on global demand by announcing that the fourth-quarter demand for its oil would be 320,000 barrels a day lower than previously forecast.

 

In 2007, OPEC expects demand for its crude to average 28.1 million barrels per day, or 800,000 barrels per day less than the 2006 average, in part because non-OPEC supplies are rising. As a result, some analysts believe the Vienna-based cartel, which is pumping close to 30 million barrels a day, may soon cut its output.

 

"If we get below $60, they're going to begin to take away barrels," Guido said. "But it's not going to make a difference."

 

...more: http://biz.yahoo.com/ap/060919/oil_prices.html?.v=15

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i havent traded them yet. but i reckon they are possible.

 

however, USO in the US may be more liquid, with lower transaction costs

 

= = =

 

Front Street Energy and Power Hedge Fund: +.5% August Return 4.6% YTD Return AUM for Fund: $335,000,000 U.S.

 

 

Front Street Energy and Power continued to provide a positive return, despite the troubles within the oil and natural gas market. The fund continued its bearish stance on oil companies which led to an increasing short position within this segment. The short position allowed the fund to remain flat on its exploration and production investments. The fund continues to load up on natural gas orientated companies which are at lows. The believe is that with winter coming inventory levels should be reduced bringing the gas market more into balance. From an equity risk perspective, we see the risk downside as minimal, based on the lows of where gas equities are currently priced.

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Profit from the Big Drop in Oil Prices

 

Over the past several weeks, oil and gas prices have fallen sharply, prompting many to conclude that the bull market has finally run its course. With oil prices back to $60 per barrel, most are now calling for prices to fall back below $50, and some see even lower prices dominating in the years to come. As there is no real evidence that suggests an abatement of those forces that pushed oil prices up from below $20 six years ago to near $80 dollars last month, such rosy forecasts really amount to wishful thinking. The recent sharp decline is likely technical in nature, providing long-term investors with an excellent opportunity to build on established positions, or create new ones.

 

Oil’s impressive gain over the past six years has attracted "hot money" from leveraged speculators, particularly hedge funds piling into the market. This has resulted in increased volatility, particularly on the down side. This week we learned that Amaranth Advisors, a $10 billion dollar hedge fund, blew up, losing better than 60% of its value as a result of highly leveraged natural gas bets that turned bad. The unwinding of these huge positions obviously exacerbated recent declines, and will likely help form a significant bottom to this correction. It is important to remember that the speculative money is not the driving force behind the underlying move. The fundamentals have been powering the energy market for years, and will likely continue doing so regardless of how many speculators tag along for the ride.

 

I have been buying oil and gas related stocks for my clients since 1996, long before the recent run up caught most investor’s attention. In the 2002-2003 run-up to the invasion of Iraq, when most strategists were calling $30 oil a temporary fluke, reflecting a “war premium,” I agued the reverse. My take was that oil prices actually reflected a “war discount” and that rather than falling when the war ended, oil prices would rise even further. See my commentary from March 13th 2003 entitled “There is no "war premium" in the price of oil!” available here. In fact, I was one of the first on Wall Street to officially forecast oil prices of $50 dollar per barrel. After that forecast proved accurate, and most top Wall Street strategist were calling for prices to collapse below $30 per barrel, I was one of the few who correctly forecast the move above $70 per barrel. In a Barron’s article dated November 2, 2004, with oil trading just shy of $50 per barrel, and oil strategist at both Merrill Lynch and Salomon Brothers predicting a quick return to the $30 level, I was the only one quoted who accurately predicted oil prices rising to $70 per barrel.

 

There are two primary reasons that I still believe oil prices will continue their long-term ascent. First, years of cheap oil, and the false perception that prices would stay low indefinitely, lead producers to under-invest in exploration and development, and consumers to over-utilize energy resources. As a result, it will take a long time for supply and demand to readjust to the new reality, ensuring high prices for years to come.

 

Second, once Asian central banks finally allow the U.S. dollar to collapse, Asian demand for oil will surge. That is because appreciated local currencies will not only make oil cheaper for Asian consumers to buy, but result in risings living standards throughout the region. As the values of their savings and incomes rise, more affluent Asian consumers will then be able to afford more energy utilizing products. Currently the purchasing power of Asian consumers is being suppressed by their governments' foolish policies of propping up the purchasing power of American consumers.

 

Since there will not be enough new oil to satisfy the explosion in Asian demand, it will instead be satisfied with oil previously consumed by Americans. The flip side of increased purchasing power for Asians will be decreased purchasing power for Americans. As a result, precisely when oil gets cheaper for Asians, it will get more expensive for Americans. As the value of Asian wages and savings rise, those of Americans will fall. The extra oil consumed by wealthier Asians will no longer be consumed by poorer Americas, who will therefore be forced to conserve and economize in ways currently unimaginable.

 

As the yuan or yen price of oil drops, the U.S. dollar price of oil will surge. Therefore American investors, who hold oil investments instead of dollars, will in effect be able to preserve their purchasing power and protect their current standard of living. One of the best ways to accomplishing this is by purchasing Canadian energy trusts. These unique investment vehicles offer tax-advantaged, consistently high, monthly income directly related to the price of oil and gas. With many funds off 20% or more from their recent highs, now is likely an excellent time to invest. To find out more about Canadian energy trusts, to see how adding them to your investment portfolio might benefit you, and for a fuller explanation of both the risks and rewards of investing, download my latest research report “Energy & Double Digit Yields: Canadian Energy Trusts Explained” by clicking here. This compressive, exclusive report, is offered free of charge, and is a must read for anyone considering investing in this area.

 

Courtesy of Peter Schiff

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