January 29, 2012 – Great post, however, I believe a different scenario is in store for the Crude Oil market: I trade futures (commodities) for a living and one of my main futures is Crude Oil. First, let’s review the facts. During all the doom and gloom and posturing on oil prices, prices did not move that much (West Texas Inter. Crude). Prices opened the year at $99.86/bl, reached a high of $103.90 on Jan. 4th., a low of $97.40 on Jan. 23rd and closed last Friday at $99.76/bl; only 10 cents lower than they opened at the start of 2012 (nearest liquid futures prices on the NYMEX). The all time high was $192.43/bl in mid-July, 2008; with a recent low of $75.47/bl on Oct. 4, 2011. That being said, here is what I see for oil prices:
The initial threat by Iran will send oil to around $108 by Feb. 7th or 8th. In an election year, Obama will get oil prices down some how; probably by twisting Saudi Arabia’s arm or a threat to release from the Strategic Petroleum Reserve. This will drop oil prices to $102 by Feb. 13/14. Additional problems in the Middle East, the Iran situation and the European crisis will raise oil prices to $111 by Feb. 29th. The Obama administration will panic (it’s an election year) and do something drastic (reserves, oil rich “friends”, et. al.) and prices will drop to $85 by April 27th.
The U.S. Administration will never allow oil prices to remain high in an election year. The poor economy will be hard enough to overcome.
However, if there is one thing I’ve learned in my 20+ years of trading futures is that Mr. Market always throws you a curve ball when you least expect it. Trading futures is a humbling experience, because, as soon as you think you’ve got it all figured out “Bang” your plans go to hell in a hand basket.
The Master of Disaster
In what is likely a long overdue move, Iran has finally decided to give Europe a harsh lesson in game theory. Instead of letting Euro-area politicians score brownie points at its expense by threatening to halt imports and cut off the Iranian economy, the Iranian government will instead propose a bill calling for an immediate halt to oil deliveries to Europe. The move, with most reports citing the Iranian news agency Mehr, has come about in response to the EU agreement to impose sanctions against Iran, which were announced earlier this week. And why not? After all if Europe is indeed serious, sooner or later Iran will be cut off but in the meantime experience significant policy uncertainty, which is precisely what the flipflops on the ground need. The one thing that Europe, however is forgetting, is that all that whopping 0.8 Mb/d in imports will simply find a…
View original post 461 more words