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“Get ready for $10 oil…”
Writing in Bloomberg View, famed analyst Gary Schilling sees oil dropping as low as $10-20 per barrel. He notes the International Energy Agency (IEA) just cut its 2015 global demand forecast by 230,000 barrels per day. That’s the agency’s fourth reduction in 12 months.
Anemic growth in Europe, Russia, and China (and negative growth in Japan) is crushing global demand.
At the same time, global supply continues to rise. U.S. oil producers are shuttering rigs (down to a three-year low of 1,223)… but only their most inefficient ones. American production will still rise 300,000 barrels per day over the next year (from 9.1 million barrels per day now—the highest output in the world).
International supply continues to swell too. Iraq just completed a deal with its Kurdish north to bring online another 550,000 barrels of oil per day. And Saudi Arabia is terrified of losing market share. It’s leading OPEC (the oil producing and exporting countries) in a global game of “chicken” by keeping production high.
The EIA sees global supply exceeding demand by 400,000 barrels per day this year.
Bottom line: The next leg down for oil will spike volatility in markets worldwide. Prepare yourself for the volatility now. Follow the Palm Beach Three-Legged Stool of Safety risk-management protocol to protect your downside first. Then prepare to take superinvestor Warren Buffett’s advice to “be greedy when others are fearful”…
The volatility will help us buy into some of the best businesses in the world at deep discounts. It will also hand a slew of quick, profitable trades to subscribers of our advanced trading service Jump Point Trader. Stay tuned for an important Jump Point Trader live update on this situation, next week.
You can read Gary Schiller’s full article, for free, right here.