Our strategic entry into the large-cap energy sector in February of this year is already beginning to produce big profits with minimized downside risk. I made the accurate call in February that oil was establishing a firm bottom around the $40 per barrel range and that we would soon see crude prices rebounding to higher levels.

Here is an excerpt from my 25 February 2009 posting: “We’re already beginning to see signs of an improved market for petroleum products in the United States: The U.S. Energy Information Administration (EIA) just released a report showing an increase in weekly gasoline demand of 1.7 percent for the week ended 20 February, compared with the same period last year, to an average of 9 million barrels per day. And, OPEC’s leaders have stated they would like oil prices to rise to $70 a barrel and that another production cut is likely when they meet on 15 March in Vienna, Austria. The U.S. government also reports that crude inventories rose by just 700,000 barrels last week, or 0.2 percent, to 351.3 million barrels, which is far below analyst expectations of a 2.25 million barrel increase. Even with all this information coming in, there remains a major glut of oil on the market – and that is why oil prices remain weak. Yet, I have no doubt that we will work through this surplus through global production cuts (and eventually increased demand via global economic recovery), which should drive oil-prices moderately higher over the next few business quarters. Schlumberger and BP are my immediate picks for strong shareholder profits in 2009 and beyond.”

Henceforth, on 25 February 2009, I announced Buy-Signals on oil-services giant Schlumberger (SLB: NYSE) at the $38 per share level -- and global petroleum producer BP PLC (BP: NYSE) at the $40 per share level.

Now, less than 4 months later, my projections on the price of crude are proving more than correct…and in response:  

SLB has now moved up over 65% from $38 to the current $63 per share level.

BP has also enjoyed a solid upward run above 30% from $40 to the current $52 per share range.

While I am maintaining my projection that both of these stocks will be trading at even higher price levels by the mid-point of next year – as always, use your own discretion when deciding where early profit-margins are to be protected by selling all or a portion of your position.  

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