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This oil trade takes the cake.
At the zenith of the speculative bubble in the oil patch -- when crude hit $147 per barrel in July -- you had everyone from T. Boone Pickens to Prince Alaweed touting $200-per-barrel oil by the end of the year.
Crude is now trading around $40 -- down $107 per barrel in less than six months. Unbelievable!
And this latest drop comes after OPEC voted to cut daily production by an eye-popping 4.2 billion barrels per day.
Looks like the world is awash in crude oil.
Needless to say, those euphoric longs in the oil stocks got destroyed. Most energy stocks lost 50% to 70% of their value during the course of the sell-off in crude.
And remember those television commercials with T. Boone and Chesapeake Energy (NYSE: CHK) CEO Aubrey McClendon pushing for the expansion of natural gas?
Well, natural gas prices are down 60% from their mid-year highs.
If you put money into T. Boone's Clean Energy Fuels Corp. (NASDAQ: CLNE) as recently as September, when the stock was trading at $20, you now own Mr. Pickens' vision for $5.
As for Chesapeake, shares hit $74 in early July. The stock is around $16 today, but not before taking a trip down to $9. Now that's painful.
I think Picken and McClendon should start a marketing company. They sure got one hell of a lot of people to bid up their stocks at precisely the wrong time.
2008 was a tough year, and it's hard to say what the new year will bring. If you need some trading ideas, check out my 5 Red-Hot Trading Strategies to put to work as 2009 approaches.
Bryan Perry is a contributor to OptionsZone.com.
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Reader Comments (Page 1 of 1)
12-26-2008 @ 6:35PM
JCH said...
It took the rapid onset of a severe global recession, caused solely by the avalanche of foreclosures that happened during President George W. Bush's drunken subprime bender, to derail oil.
Peak oil is not going away.
Oil will rebound or there will be no sustainable rebound. Rapidly escalating energy prices are unavoidable in any future economic expansion.
12-27-2008 @ 12:31AM
brien said...
I recognize that you have only one interest - making money and therefore what Boone and the others were touting did not make you money. But you are part of a larger group that is helping keep the USA dependent on foreign oil. The only time that I can remember in the last twenty years that alternative energy sources started generating real interest was during the run-up in oil prices this past spring/summer. The second the Arabs decided to bring the prices down - many of you forgot how we get manipulated into sending our wealth overseas to these folks and abandoned the alternative energy ideas. We need to stay the course if we want to stop sending 700 billion per year of our money to some desert nations that produce nothing of value - but discovered oil below their sand. That 700 billion when spent in the US and then re-spent over and over again probably has the value of 3 trillion in spending here in the states. But once we send the 700 billion away, the only way we see any of it again is when the Arabs come over to buy our real estate or prop up our banks. Your thinking is what is going to bring America down!
12-27-2008 @ 4:36AM
BELLCORD said...
ONE THING YOU CAN SAY ABOUT 'PEAK OIL' NOT MANY THEORY'S GET DISCREDITED IN 4 STRAIGHT DECADES...FACE IT, OUR PLANET LIKE EVERY OTHER IN THIS SOLAR SYSTEM IS AWASH IN HYDROCARBONS.....SPECULATORS BE DAMNED..