TAMPA, Fla., May 4, 2016 /PRNewswire/ -- James Cordier, founder of OptionSellers.com warns that oil prices are reaching an annual peak and will begin pushing lower this summer. According to the research of OptionSellers.com, investors should consider taking profits on oil price based investments, and futures traders should consider going short in the coming weeks.
- Powerful Seasonal Tendency: Oil prices tend to be highly seasonal in nature. As a whole, prices tend to rally in Spring in preparation for peak gasoline demand during the heavy driving summer months.
As summer actually begins, oil prices typically tend to weaken into the fall. With Gasoline supplies currently 13.913 million barrels above last year's levels and 25.47 million barrels above the 5 year average, we see this seasonal tendency beginning sooner in 2016 – as early as this month.
- Supply Glut getting worse before it gets better. US crude Supplies are at 100 year highs. Current US stocks are 136.331 million barrels above the 5 year average and 49.609 million barrels above last year at this time. With the failure at Doha, OPEC continues to gush production at full steam. Iran is already pumping 3.5 million barrels per day and expected to hit pre-sanction production levels by summer. An article in the Wall Street Journal points to Iraq increasing production to alarming levels. Eventually, market forces could reign in this type of excess production. We don't see that happening this year.
- Dollar Swoon and Chinese buying will end this quarter. The rapid decline of the dollar has brought speculative interest into commodities across the board. Everyone from U.S. hedge funds to China is buying commodities. Much like the both real estate and the stock market bubble in China, over eager Chinese investors are now pouring into commodities as their new Casino. Despite burdensome supply, Iron ore prices are up 54% this year off of such massive public speculation. And it's not just metals. Corn volume on the Chinese exchange surged 1300% last month. As the dollar could be close to pricing the Fed's more dovish stance, a stabilization or reversal of the dollar downtrend could bring rapid liquidation to commodities long positions. We see this happening this quarter – which would add to the bearish pressure on oil.
Conclusion: Investors should position for lower oil prices in beginning this quarter and extending into the end of 2016. OptionSellers.com projects oil prices below $35 per barrel in Q4 2016.
About James Cordier
James Cordier is Principal and Founder of OptionSellers.com in Tampa, FL. James and his firm specialize in option writing and have developed a strategy of selling out of the money options on futures contracts that they share with their clients. James' study of the commodities market began at age 14, when a silver coin collection sparked his interest in silver futures. He began his career at Heinold Commodities in Milwaukee as a broker in 1984. In 1999, having established a solid reputation within the industry, he founded an investment firm specializing exclusively in selling options.
He is co-author of the book "The Complete Guide to Option Selling" 1st, 2nd and 3rd Edition, (McGraw Hill 2015).
With over 20 years of trading experience, he is quoted regularly on the futures markets in several national and international publications including the Wall Street Journal, Bloomberg News, Barron's, Forbes, CNN
Darlene March - March Media Relations
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