Crude oil prices have been plummeting and is trading at $50.75/barrel as I write this. That is a big drop from the all-time high set just this past summer of $147.27. I think this dramatic pullback in oil prices could be a terrific time to start buying into the sector for a long term hold.

It is now proven that oil can break the $100/barrel mark and will most surely head that way in the future, perhaps 2009 or shortly thereafter. Oil is a finite resource and OPEC will do anything in its power to restore the enormous profits they enjoyed from high oil prices.

Consumers will also likely resort back to old driving habits and the reduction in use of gasoline will likely level off over the next few months as prices at the pump drop and hold below $1.75/gallon. While a global recession will likely curtail overall spending, the long-term outlook for oil prices remains quite strong.

I am looking into Canadian Royal oil trusts for their high dividend rates (20%+) and the fact that the price movement of their shares directly corresponds with crude oil prices. These companies face some changing tax laws in 2011 that will adversely effect their business models, but I think significant profits can be booked well before that deadline.

[tags]crude oil, gas prices, canadian royal, oil trusts, shaun carter, dividends, gasoline, opec[/tags]