Feel the
Oil Prices
Put your seat belts on because the perfect storm could become a reality in the global oil markets. At the beginning of the year, before the war, I predicted oil prices ($93) would test Stratos Initial Target of $96, and here we are, ahead of schedule. Most experts were expecting oil prices to go under $50, and they are still predicting lower prices soon. I think global oil prices might go much higher first.
My risk analysis was I expected the demand for oil would increase because of improved global economies and/or the possibility of a supply disruption. I thought it was a possibility that the Strait of Harmuz could be an achilles heel to the oil industry, which is now true because it remains closed for over 90 days. The attack on Iran has now become the “Trump War”. Because most presidents think of their own legacy, Trump’s will be remembered by this war. Since there is no real negotiation so far with the Iranians besides the truce, the options are becoming less and less attractive, which points to the war continuing until the Iranians get their demands, or Trump gets his.
When I talk about the perfect storm, the global oil demand has continued to be strong, but supply has been reduced beyond most expectations. It now appears that oil production and supply have been reduced significantly and indefinitely! This could be tested if we go back to war and the Iranians attack their neighbors’ infrastructure, as we may potentially attack theirs. Negotiations are doubtful because for over 60 days, we have been hearing that Iranians have been “begging” for a deal. That’s hard to believe. What makes us different is that Stratos has been giving price targets and support levels that are hard to find. Stratos Intermediate Target for oil is $164.
The perfect storm is now possible if the worst starts to become a reality when the U.S. seriously attacks Iran again. I am not optimistic about a solution, especially if Trump’s goal is to strip Iran of their nuclear ambitions.
The U.S. stock market has been able to show strength as above-average profits, and favorable tax legislations, have offset the increased cost of energy in the U.S., but for how long?
The big picture is inflation, interest rates, and eventually the dollar are all going in the wrong direction. I consider the S&P 500 (7584) to be fair to overvalued, especially if it starts trading above Stratos Primary Target of 7792. Stratos predicted in the beginning of the year that the U.S. stock markets could hit record-highs before entering the summer, and here we are. It’s reasonable to expect a technical correction after such a strong three months. Although volatility is fairly low, it may double overnight if Stratos Investments is accurate about the potential, explosive outcome in the Middle East.
I recommend diversifying into securities, like commodities, energy, physical assets, and material strategies that might be able to weather the storm and could appreciate during this new inflationary and higher interest rate cycle. To the U.S. consumer, $7 gasoline would be the starting point if oil prices goes above $150, which will most likely be a negative for consumer confidence that the U.S. economy is not seeing yet. This could be a Wake Up Call. Good Trading for the Long Term.
Contact Info:
Address: 210 N Stanton St Ste 3 El Paso, TX
Phone: (915) 312-6117
E-Mail: Bernard@stratosoneseven.com
Stratos Investments is a DBA of OneSeven, an investment adviser in Ohio. OneSeven is registered with the Securities and Exchange Commission (“SEC”). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. OneSeven only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of OneSeven’s current written disclosure brochure filed with the SEC, which discusses OneSeven’s business practices, services, and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. All titles listed for Individuals associated with Stratos Investments represent the individual’s role with Stratos Investments.
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