How High Will Oil Go?

Brent Sea Crude Oil (BRENT)

Thursday, August 29, 2013

The situation in Syria is proving a headache in so many ways. But today, we’re only going to look at how it’s impacting the price of oil, and what that might mean for the US economy and stock market.

According to Societe Generale’s global head of oil research, Michael Wittner, crude oil could briefly spike to $150 per barrel or more if Syria’s supporters seek to retaliate against a military strike:

“Our big worry is Iraq. The Sunni vs. Shiite conflict in Syria has a direct parallel in Iraq, and the violence in Iraq has reached levels not seen since 2008. It could be Sunnis. It could be Shiites. Bottom line, Iraq has been escalating. My guestimate is it’s about a 20 percent chance, it’s not a 2 percent or 5 percent. It could happen. I don’t think it’s likely, and it’s not my base case, but I’m not going to be dismissive of it. I would say there’s another $5 to $10 of upside just on worries."

Bringing the story back to the States, we are currently waiting on the Fed to start withdrawing excess capital from the American economy. The principle reason to do so would be the threat of inflation.

Now, a prolonged spike in oil prices would certainly slow the American economy because it would raise costs all around. But there is not much the Fed can do to help here, because all its tools are inflationary as well. In fact, it might even have to accelerate tapering!

Talk about caught between a rock and a hard place. However, Washington does have a way out of this mess.

Brent Crude 082913

Bottarelli Research Tip: We can’t swear that Washington won’t screw this up. But we suspect that the attack on Syria will be extremely limited, and any shortfall in oil production or delivery will be countered by a release from the US. Strategic Oil Reserve. Chart-wise, we can see the argument for a run up to $120. But in the last two years, Brent Crude Sea Crude Oil (BRENT) has only spiked above that level once. And all six previous rising cycles ended between $115 and $120 — and were followed by price drops averaging 15%. Our recommendation? If you have speculative oil profits on the table, best take them very soon.

Green Mountain Hits Another New High: Despite the fact that Syria sparked one of the biggest single-day market sell-offs of the year, shares of GMCR very quietly hit a new 52-week high again today. With the summer over and momentum now coming back into the market, it’s once again time to trade this phenomenal performer.

Click here to see how you can start with $1,000, use only your profits to enter each new GMCR trade, and turn it into over $100,000.

Information, opinion, research, and commentary contained herein is obtained from sources believed to be reliable; their reliability, however, cannot be guaranteed. The maxim of Caveat Emptor applies — let the buyer beware. Bottarelli Research does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment.

Investments recommended in this service should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Bottarelli Research reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscriber’s initials will be used unless express written permission has been granted to the contrary.

CSR Group, LLC expressly forbids its writers from having a financial interest in any security recommended to readers. Furthermore, all employees and agents of CSR Group, LLC and its affiliate companies must wait 24 hours before following a published recommendation.

This e-mail was sent to buzzhairs.finance@blogger.com because you have opted in to receive the Bottarelli Research Chart of the Day. If you prefer not to receive future e-mails from Bottarelli Research, please unsubscribe from our mailing list. Your privacy is important to us. See our Privacy Policy for details.

About

Questions

Disclaimer

Finance Newsletters

Thursday, 29 August 2013