About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Friday, October 26, 2012

Oil Price

In my view, the oil price is experiencing its first normal seasonal price decline since
2006. I am looking for WTIC crude -- now around $86.25 bl. -- to fall to about $80.-
by the latter part of Dec. as gasoline demand slackens and before there is the final
ramp up for heating oil.

Next year, the oil price may again be influenced by geopolitics. With the national election
over, the US will take a much harder look at Iran's nuclear materials development program
and may even enter into bi - lateral, one on one talks with the Iranian government. Israel
plans new elections early next year, and the rightest Likud group may form an even more
conservative coalition which could lead to more provocative talk about Iran. Tehran has
also voiced an interest in curbing oil production further if tougher economic sanctions are
leveled against it. Finally, insurrection in Syria has intensified and some of the feared regional
spillover (Turkey, Lebanon) is in evidence. US / Iran direct talks, should they proceed,
will be accompanied by exceptional suspicion and mistrust built up over the past 60+ years
of run - ins of varied severity with the big fear being that Iran is simply playing for time.
A Romney presidency could well add initial bombast to the situation.

As a hedge on household costs escalating, I may again go long the oil price with a targeted
time of Dec. 2012 - Feb. 2013. That would situate me for seasonal price strength and allow
time for the geopolitical situation to develop further.

WTIC Price Chart

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