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May 9, 2018 | Don’t Believe Oil Prices Have Discounted the Worst

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.

Here’s a headline that cries out to be rebuked: Oil Traders Have Already Priced in the Effects of Sanctions. I’m not so sure myself — am on record, actually, with a prediction that prices will top $80 a barrel before this run-up ends. I should mention that the headline was not in some rinky-dink newspaper that gets all of its non-local stories from the  Associated Press, but in the Houston Chronicle, which covers the energy sector insightfully and with great diligence. A companion story on the front page notes that Texas shale drillers could benefit from market disruptions caused by Trump’s planned sanctions against Iran, which is a major energy producer. The Chronicle story does make clear, albeit unintentionally, that if crude oil prices should continue to rise, it would have to be for some reason other than the sanctions. What the markets have not fully considered, as I wrote here earlier, is the possibility of war between Iran/Hezbollah and Israel. If it’s coming, energy markets are going to react in a way that will make the recent run-up in prices seem relatively mild.

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May 9th, 2018

Posted In: Rick's Picks

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