WINDERMERE, Fla. (Stockpickr) -- Crude oil prices continue to skyrocket due to tensions in the Middle East and North Africa -- and due to an even more serious driver, the plunging U.S. dollar. The U.S. dollar is hovering just barely above its three-year lows, which it hit last week at 73.73. There are now fears in the market that the dollar is setting up for an even more sinister decline as the U.S. government grapples with credit issues. The only near-term catalyst that might stop the dollar liquidation is if the Federal Reserve ends its quantitative easing policy in June. An end to QE2, and more importantly, no QE3, could spark a rally in the dollar.
It's possible that Fed chairman Ben Bernanke will hint at an end to his dollar printing campaign when he hosts the first-ever Q&A style press conference by a Fed chairman on Wednesday. This conference will follow an interest rate decision by Bernanke, where he's expected to maintain interest rates between zero and 0.25%.
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Even if that plays out, I still think crude oil will stay in its uptrend and potentially trade toward $150 to $200 barrel in the next six to 12 months. Crude oil for June delivery is now trading at around $112 a barrel, which represents a 32% rise in the past year. The path of least resistance is for crude oil to revisit its all-time high of $147.27 a barrel. If we hit that price, and we breakout above it, then the next psychological level is $200. That's where I am getting my $150 to $200 target from. I am anticipating the move.As crude oil prices continue to skyrocket, one of the most profitable ways to capture gains is with Canadian oil sands producers. While it's true that we get most of our crude oil from the Middle East, we also know that region of the world is rife with unrest and supplies disruptions. This leaves Canada positioned to pick up the slack and capitalize to meet booming global demand for oil. Don't think for a second that Canada isn't a major player; it's only second in the world in terms of oil reserves behind Saudi Arabia. And the best part about Canadian oil sands is that it only costs around $30 to $40 per barrel to extract oil from the sand. The higher crude oil goes, the more profitable it becomes for Canadian oil sands producers and the higher the probability they will see massive revenues. Let's also face another reality; the world is probably never going to have to worry about political unrest in Canada either. Here's a look at a number Canadian oil sands stocks that are positioned to benefit off of rising crude oil prices.
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