Time to buy oil?

Consider a few things about recent oil prices:

- Oil is as low as it has been in a while.

- We still have two and a half months left in the hurricane season. As we all know, if a big hurricane hits the gulf, oil prices will go up - guarranteed.

- When you look at the naysayers of peak oil, they're all ecstatic, confident that the downward trend in oil prices will continue. I saw one fool who says $45/barrel is right around the corner. People who deny peak oil are likely the same people whose myopic perspective got us into this mess - and will likely continue to drive down oil prices.

- Everyone is big on Devon/Chevron's "Jack2" find (see prior blog post). If you investigate, you'll agree this is garbage - no way will they get as much as they say they will, and even if they do it'll still drive prices up due to the massive costs of extracting and transporting the oil (this is due to it's incredible depth, and the fact that it's a bunch of small wells, it's distance from shore, etc.)

- There's not one piece of news that can refute any of the fundamentals about peak oil. This is true even if Jack 2 is as big as the upper end of the (likely very aggressive) estimate it would have 15 billion barrels. That makes it comparable to Prudhoe Bay - a tiny fraction of the remaining reserves in the entire world. Less than 2% for sure.

All tolled, there is nothing that justifies the price of oil dropping 15-20%. "Why would this happen," you might ask? It's because traders simply aren't as smart as we think they are. In addition, traders aren't the only ones involved here in moving the market - there are also major investors, who definitely aren't the brightest lights on the Christmas tree.

I say if you've been holding out on investing in oil, now would be a great time to jump in head first. See my prior posts about different ways to do so.