Energy fund guru T. Boone Pickens at one point predicted that oil prices would hit $75 a barrel this year and add another $10 to reach $85 next year. It looks from recent activity that a revision may be called for in those forecasts.
This year, crude prices have doubled to the mid-$70s, or about where Pickens thought they'd end up. That movement has occurred in the face of a decline in demand throughout much of the world and inventory that has remained relatively stable despite OPEC production cuts. Frankly, crude seems to be moving more on economic optimism than on traditional supply and demand considerations.
Despite the dip in crude prices from last summer's $147 high and the resultant cancellation of numerous energy projects, the world of oil and gas has remained wild and woolly during 2009. Let's take a quick world tour:
Nigeria
In Nigeria, the militant group MEND has attacked oil companies' operations throughout the year. Among those victimized by the group have been ExxonMobil (NYSE: XOM ) , Royal Dutch Shell (NYSE: RDS-A ) , and France's Total (NYSE: TOT ) .
Angola
As a result, Angola has passed Nigeria as the top African oil producer. When noting the companies that have been laboring successfully in the newly canonized OPEC country, you can include BP (NYSE: BP ) and the second-largest member of the oilfield services contingent, Halliburton (NYSE: HAL ) .
Iraq
And then there's Iraq, which several weeks ago held an auction to work its previously developed fields. Because the Iraqi government was stingy in accepting bids, only a BP-led group was successful in receiving a single award for one of the six oilfields up for bid. The government is now planning a similar bidding process for undeveloped fields. The result will tell us a lot about how fast the nation's vast reserves will be developed.
Brazil
Last but not least is Brazil, where deepwater discoveries have come fast and furiously from the likes of Petrobras (NYSE: PBR ) , Repsol (NYSE: REP ) , and others. Now the government is considering putting all deepwater operations under direct state control. The result will be another matinee for us to watch carefully.
So Pickens isn't wrong or low in his forecasts. He's just trying to call something with too many moving parts. I could mention oodles of other oil-producing countries in disarray.
Given the world's dependence on oil and oil's potential for volatility, Fools would be wise to include energy representation among their investments. A good place to start is with ExxonMobil, which is successfully involved in a variety of projects all across the globe.
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