Profiting from Rising Oil Prices

Robert Hsu, June 02, 2009

Oil prices are once again on the move higher. After peaking at $147 per barrel in July 2008, prices corrected dramatically, falling as low as $30. That's an 80% decline!

Since the beginning of 2009, though, prices have steadily climbed higher. Today, crude oil per barrel is trading close to $70. The jump in prices, as you can imagine, boosted prices at the pump as well, with most people paying around $2.50 per gallon.

With crude oil prices increasing, gasoline and diesel prices were raised on Monday by the National Development and Reform Commission (NDRC) in China. This move bodes well for a number of China's leading energy companies, including the country's leading offshore oil driller.

This state-owned enterprise (SOE) is one of the three main oil and gas companies in China, but it remains the only one permitted to conduct exploration and production activities offshore in conjunction with foreign governments and companies. In fact, it has monopoly drilling rights on the massive undiscovered reserves of oil and natural gas in the South China Sea.

As a SOE, the company has benefited over the past eight months from an increase in government support and stimulus spending. So at a time when many oil and gas companies were feeling the pinch of lower energy prices around the globe, this Chinese company's shares actually moved higher following the Chinese government's stimulus announcement. Shares are up 63% since early November.

What's even better is this company isn't adversely affected by the NDRC's adjustment to the country's retail prices for gasoline and diesel. That's a good thing, considering that it adjusted prices three times already in 2009. The company actually benefits from an increase in oil prices and a boost in production, since it relies on oil production for 82% of its revenue.

Going forward, as demand for oil increases, prices rise and more discoveries are made in the South China Sea, I expect this Chinese company to benefit nicely. My China Strategy subscribers are already sitting on a whopping 128% gain, and now it's your chance to profit as well. Join China Strategy today to learn more about this company and to receive my current buy advice.

Profiting from Rising Oil Prices

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