June 15, 2010: Latest On The BP Oil Volcano In The Gulf

Say goodbye to less than $67 a barrel oil forever? Oil back above $74, Day Trader's Pick For This Week: Transocean (NYSE: RIG)

(click charts above to enlarge or click on RIG and $WTIC to see respective charts)

I've been following oil very closely since the Deepwater Horizon drilling platform sank out in the Gulf.

Back on April 15th, oil hit this year's high at $87.26. The Deepwater Horizon exploded on the night of April 20th. The next day, oil barely budged as the extent of the oil spill was not even known.

On May 3rd (first trading day of the month), oil tested the $87.26 resistance, by hitting an intraday high of $87.17.

Oil headed South on May 4th only to bottom with it's low in May on the 25th with a $67.15 low.

Since then, as the real extent of the Gulf Oil Gusher Disaster became better known, a few things have happened to cause oil to start a slow grinding upward rise in price:

1. The Federal government has announced a shake up of the MMS, meaning no more Bush/Cheney/Obama friends of Oil being planted in the governmental regulatory agency which was supposed to overlook deep sea drilling and mining in the USA.

2. The Feds placed a temporary moratorium on offshore drilling despite Governor Bobby Jindal begging the Feds to put back to work his Louisiana drill workers laid off by the moratorium.

3. BP has opened field offices in all the Gulf States to handle a raft of lawsuits brought on my failing tourism, fishing, etc.

4. Transocean and Halliburton employees interviewed by CNN and 60 Minutes have told versions of the explosion which all coincide on one point, i.e., a BP official made the choice to keep drilling despite many a worker's worries about unsafe and untried drilling practices. BP officials were under pressure to get the well drilled. Safety was not on the mind of the BP official who told Transocean and Halliburton officials that BP was demanding the drilling continue and screw safety procedures.

5. Several notable Oil experts are saying their are plumes of toxic dispersant/oil mixes which are hundreds of miles long out in the Gulf which are going to play hell with sea life. The extent of what these plumes might/will do to sea life and Gulf Coast economies is unknown at this time.

6. More than one pundit has said BP should withold paying dividends to its investors.

7. More than one pundit has suggested BP will be required to go bankrupt.

8. More than one pundit has said the Federal Government should place BP in receiver ship.

9. The bad news about the disaster and BP has affected, negatively, all oil sector stocks, but especially BP, Transocean and Anadarko (company which owns a minority share of the spewing Deepwater Horizon well).

With all of the above, oil found a new bottom in price (since the Deepwater Horizon exploded) on May 25th at $67.15


My Thoughts:

As more people realize tougher governmental regulations are coming to oil rigs, more people will realize the cost of drilling will continue to rise. And costs will especially escalate on deepwater rigs.

As a believer in Peak Oil, I want to plant one solid idea in your brain today: all the easy to find oil has been found and is decelerating in oil recovery. All the hard to find, hard to drill oil and hard to process oil (offshore, tar sands, oil shale, etc.) are going to skyrocket in expense for the next 20 years before the free world has switched transportation and energy to more greener energy.

I daresay today, we will never see oil trade for less than the May 26th low of $67.15 again in our lives.

That said, I recommend we concentrate on how to profit off what is sure to be a long trend in rising oil prices from here.

In the coming weeks, I'll toss out some ideas here from both traditional and Green energy sectors.

The Deepwater Horizon Catastrophe is a game changer in the way the USA explores for energy. Traditional energy (oil, Nat Gas, coal) are going to go up as more regulatory oversight is demanded by US citizens. Keep all of the above in mind as you invest for the short term and long term.

I recommend all day traders to follow Transocean (NYSE: RIG) at Friday's close of $46.85. I will be "scalping" this trade every day this week. Do not, repeat, DO NOT buy and hold this stock for the long term as BP is now threatening to sue Transocean and vice versa.

Transocean has already received hundreds of millions in Insurance payments for the Deepwater Horizon disaster. It won't be long 'til Congress and BP will seek to get their hands on some of that money.

Transocean's P/E is now at a miniscule 5.20.

Transocean is now 53% off its high in less than a month.

Recommendation: use both 5 minute and 15 minute charts to trade in and out of RIG. Scalp it long, scalp it short. Do not hold over night.


Sincerely,

Rock Trueblood


p.s. Asian shares rose this morning as well as oil. S&P futures (3:45 AM EST) are now 3 points above last Friday's close. There are strong down trendline resistances for the S&P 500 and the Dow Industrials. Will the bear market continue, or will we break to the upside today?

Regardless, pick your sectors well. Only buy and hold defensive stocks which will never go out of style.

Florida Keys Island Mansion Still Has No Takers At Over 70% Off!

Dreamers:

Feast your eyes on the above island in the Florida Keys with house built by a "major recording artist" some years back and which is dropping in price precipitously over the past week. This house has been on the market since September 1, 2006 and has still not found a buyer.

Here is the MLS description of this mansion:

Private Offshore Island With 3/3.5 Luxury Home In The Keys! Owned & Improved By Major Recording Artist W/ New Pool, Hot Tub, Central Air, Concrete Pier, Jet Boat, 35kw Generator In Sound-proof Shed, 850-gal/Day Desalinization, New Electric, New Landscaping & High-end Finishes. Self-contained, 70' Onshore Lot W/ Concrete Dock, 3-story Custom Home, 360 Degree Ocean Views, Impact Windows & More.

Here are the stats:

Status: Active
Original Price: $10,000,000
Prior Listing Price: $3,799,000 (this change just 7 days ago)
Listing Price: $2,995,000
Address: 0 Melody Key
Key/Island: Summerland Key
Subdivision: Misc Summerland Key
Mile Marker: 28.0
Prop Type: Single Family
Days on Market: 1376
Bedrooms: 3
Bathrooms: 3.1
Square Ft. 2,822
Price Per Sq. Ft. $1oo.00
Lot Sq. Ft. 0
Year Built: 1992
Taxes: $14,800 (subject to change)
Tax Year: 2005
Exemptions: None

To see more photos of this house, click here: PHOTOS

At least the Realtor for this listing hasn't been playing games by taking the house off market and putting it back up a half-dozen times to try and hide it's real loss in value over the past 1,376 days.

How low will this one go? Well, since September 1, 2006, it has already lost more than 70% of its value. I'll wager this one loses another 20 to 50% from its current listing price of $2,995,000 before it is all over.

Stay tuned.

Rock in Paradise

The Secret Powers of Time

Heartbreaking Photos of Wildlife Dying To Live With the BP Oil Gusher

There is no way to embed the slideshow from Huffington Post. So, all I can do is link you to "Crimes Against Nature" . . . a heartbreaking answer to all the jerks such as Brit Hume, Haley Barbour and other Neo-Con/Libertarian/Tea Party yodelers who kept asking, "Where's the oil?"

Click here for "Crimes Against Nature" - "Gulf Oil Spill - Animals In Peril".

Sarah Palin Twists Logic . . . And Her Panties . . . In Her Recent Tweet About "Drill, Baby, Drill"

Check this out: Sarah Palin says the oil spill is the fault of Progressive environmentalists.

See, Sarah Palin leaves this tweet on Twitter yesterday:

"Extreme Greenies: see now why we push "drill, baby, drill" of known reserves & promising finds in safe onshore places like ANWR? Now do you get it?"

While Sarah was tripping over her tongue with her panties down to her ankles, leave it to Rachel Maddow to wade in to explain what Palin is trying to do: Palin wants to blame the Deepwater Horizon Disaster on Environmentalists. (By the way, this is the new meme of the Republican Shout Radio and Shout TV Machine.)And her tweet implies the disaster would not have happened had we listened to her and simply "drilled, baby, drilled" onshore in say ANWR.

But that's where Palin, once again, becomes separated from the truth.

Let's briefly set you up for the clip you are about to see and which will make you shake your head, yet again, at the hypocrites in the GOP . . . especially Sarah Palin . . .



Rachel Maddow starts out this video clip with a great edited speech from President Obama who tells it like it is when he talks about the agenda pushed by his opponents, ". . . more tax breaks for the wealthy, and fewer rules for corporations."

President Obama says, "If you are a Wall Street Bank, or Insurance Company, or an Oil Company, you pretty much get to play by your own rules, regardless of the consequences for everybody else."

The President continues, ". . . And now we have a choice as a Nation: we can return to the failed Economic policies of the past, or we can keep building a stronger future. We can go backward, or we can keep moving forward." After which the President says he wants to keep moving forward, and he believes Americans wish to keep moving forward. When his speech concludes, you hear moronic booing in the background.

As Rachel Maddow points out, when you are no longer the party in power, you don't really have one figure head to counter a President who speaks so well. But as Ms. Maddow points out, the Republicans do have Sarah Palin and her twitter account.

At which point Maddow shows a shot of the actual Palin tweet on her monitor. Right afterwards, Maddow deciphers how Palin is telegraphing how she, Palin, was all for drill, baby, drill on land. And then Maddow simply plays one video clip after another which totally destroys Palin, and John McCain, and Mitt Romney and Rudy Giuliani . . . all of whom, Ladies and Gentlemen, left a trail of videotaped speeches where they all, time an again, said America should be "drill, baby, drill" not only on land but offshore and even "deep waters" offshore.

Just watch the video. Let's see Palin back away from her own videotaped speeches on the campaign trail. And let's see Romney, McCain and Giuliani all shed more crocodile tears for the Gulf of Mexico residents suffering because the GOP, the Party Which Wrecked America, would not regulate the Big Oil companies which pimped their Party.