Oil now trades at around $110 U.S. a barrel. That’s up over 29% from $85 U.S. a year ago, and 175% higher than its low of $40 U.S. in February 2009.

We think oil prices could rise even further if the global economy continues to rebound, as we expect. Even so, we continue to advise against overindulging in Canadian oil stocks. That’s because the Resource sector (including oil) is highly volatile, and no one can accurately predict future oil prices.

However, you can profit nicely over long periods by investing a reasonable portion of your portfolio in well-established or well-managed Canadian oil stocks, especially those with high-quality reserves and rising production. These companies are well-positioned to profit during periods of high oil prices, and are able to at least partly offset price declines by producing more oil.

Canadian oil stocks: Crescent Point could be sitting on a gusher at Bakken

One oil producer that has been focusing on increasing its reserves and production lately is Crescent Point Energy Corp. (symbol CPG on Toronto). In light of the sharp rise in oil prices, we updated our buy/sell/hold advice on Crescent Point in the latest issue of Canadian Wealth Advisor, our newsletter for safety-conscious investors.

Crescent Point produces oil and natural gas in western Canada. The Canadian oil stock’s average daily production of 69,779 barrels of oil equivalent (including natural gas) is weighted 90% toward oil and 10% to natural gas.

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The company continues to focus on its light-oil Bakken development in southeastern Saskatchewan. Crescent Point plans to spend at least $800 million on exploration and development in 2011.

The Bakken formation covers parts of Montana, North Dakota and Saskatchewan, and could contain up 500 billion barrels of oil or more. Oil was first discovered at Bakken in 1951, but it has always been hard to extract the oil from the rock.

However, modern techniques, such as horizontal (or slant) drilling have made it easier to access the hard-to reach deposits like those at Bakken. Producers then use high-pressure liquid and sand to fracture the rock and release the oil.

Crescent Point was one of the first oil companies to enter the Bakken area, when it bought Mission Oil & Gas Inc. in February 2007. Since then, it has been steadily adding to its holdings, including last year’s purchase of 79% of privately held Shelter Bay Energy for $1.1 billion in Crescent Point shares. Shelter Bay’s production was mostly from the Bakken area.

Our in-depth analysis gives you all you need to know to make an informed decision about Crescent Point

Crescent Point converted from an income trust to a corporation in 2009, but it has maintained a high dividend payout. Its shares have a high 6.0% yield.

In the latest Canadian Wealth Advisor, we take an in-depth look at Crescent Point’s efforts to boost its production at Bakken, to see if it is in a good position to profit from a continued rise in oil prices.

Our analysis of the company’s prospects is based on our careful examination of all its fundamentals, including its payout ratio, a crucial factor in determining whether it can afford to maintain—or increase—its dividend. At the end of our analysis, you get our clear, concise recommendation on whether you should buy, hold or sell this Canadian oil stock.

You can get our latest advice on Crescent Point and other oil stocks that may be appropriate for the part of your portfolio you devote to resource investments in the latest Canadian Wealth Advisor. What’s more, you get this issue absolutely free when you subscribe today. Click here to learn how.