For Immediate Release:
January 17, 2007
Contact: Ian Mathias 410-864-1652 Oil’s Plunge a Fake - Expect $80 a Barrel Before 2008 Baltimore, MD: Oil prices have sunk like a stone since the summer of 2006 as they now hover barely above $50 a barrel. Saudi optimism and a silent OPEC have recently spurred this bearish trend and many traders are banking on a cheap oil market in 2007. However, one trading veteran and commodities expert believes that current prices are driven down entirely by sentiment, and that higher oil costs are right around the corner. “We’re seeing the exact same phenomenon we encountered last summer,” said Kevin Kerr, editor of Resource Trader Alert. At the height of oil’s rise in the summer of 2006, Kerr believes that the price was driven way above actual value by the “fear premium” of another potentially devastating hurricane season. “Now we are seeing the same irrationality on the downside,” Kerr continued, “Everyone wants to see cheap oil, and momentarily adequate oil supplies and a warmer winter are giving speculators an excuse to sell.” “No actual change in production, supply, or distribution is fueling this sell-off,” Kerr continued. In fact, the market seems to be ignoring any resistance against the current plunge in prices. Venezuelan leader Hugo Chavez announced recently that he intends to completely nationalize oil production. Chavez’s infamy and his government’s instability would naturally lend to an increase in oil’s value, but the market was almost completely unresponsive. According to Kerr, the same statement back in July of 2006 “would have sent oil to $100 a barrel…there isn’t a doubt in my mind.” “The real outlook for oil is not good,” concluded Kerr. “I’ve heard predictions of a late season cold-snap due to El Nino, geo-political tensions are as high as ever, and the Gulf Coast is still very vulnerable to hurricane damage,” said Kerr. “A lack of viable alternatives will keep oil demand high and any sort of disaster could easily send the price up 30-40%. “The bottom line is that as we get close to summer, likely in March when OPEC meets again, reality will sink in and the shorts in this market will begin to run for cover.” said Kerr. “This pendulum will definitely swing back the other way - hopefully with some basis in the true fundamentals. Right now crude should be, in my opinion, about $63/barrell. This summer it should have been at about $68, not $78.” Kerr went on to say, “By the year’s end I fully expect this market will be making a new high - if not sooner.” Kevin Kerr is the editor of Resource Trader Alert and a frequent contributor to The Daily Reckoning. His unparalleled expertise in trading commodities options and futures has made him a regular contributor to news outlets like CNN, FOX News, CBS Evening News, CNBC, Bloomberg and many others. For more on Kevin, visit www.kevin-kerr.com A product of Agora Financial, The Daily Reckoning is written by New York Times best-selling authors, Bill Bonner and Addison Wiggin. The Daily Reckoning is a daily, free e-letter that weaves information about the financial world, investing, and everyday life into an educational and entertaining format that has been engaging readers for over seven years. SOURCE: http://www.dailyreckoning.com ###
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