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December 6, 2016 | A Warning to Crude-Oil Bulls

Rick Ackerman

Rick Ackerman is the editor of Rick’s Picks, an online service geared to traders of stocks, options, index futures and commodities. His detailed trading strategies have appeared since the early 1990s in Black Box Forecasts, a newsletter he founded that originally was geared to professional option traders. Barron’s once labeled him an “intrepid trader” in a headline that alluded to his key role in solving a notorious pill-tampering case. He received a $200,000 reward when a conviction resulted, and the story was retold on TV’s FBI: The Untold Story. His professional background includes 12 years as a market maker in the pits of the Pacific Coast Exchange, three as an investigator with renowned San Francisco private eye Hal Lipset, seven as a reporter and newspaper editor, three as a columnist for the Sunday San Francisco Examiner, and two decades as a contributor to publications ranging from Barron’s to The Antiquarian Bookman to Fleet Street Letter and Utne Reader.

My latest crude oil tout is lengthy and detailed because it is important that we get it right. For if the long, powerful rally from January’s lows in the mid-$30s is near an end, then so is the spike in long-term Treasury yields; the sell-off in gold and silver; the ageless, stock-market bull; talk of a resurgent inflation; and, most importantly, good times. The banksters and portfolio managers went ‘all in’ on the energy patch as the economy recovered from the 2007-2008 housing bust, and oil prices must therefore remain buoyant in order to keep a potentially catastrophic deflation at bay. Higher oil prices are unsupported by demand, however, and the supply-side story concerning cartel efforts to curtail output is unpersuasive, to put it mildly. Under the circumstances, even though crude prices have come a long way since bottoming early in 2016, the rally should be viewed with great caution.

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December 6th, 2016

Posted In: Rick's Picks

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