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Why Oil is Cheap Again

Back in July 2006, I set a price target of $125 on oil and I gave it two years. Back then, oil was at $75 a barrel. My reasons were simple:

1) Demand from developing nations including China.
2) No addition to the world oil supply.
3) Geopolitical concerns in Iraq, Nigeria and Venezuela.
4) A commodity bull cycle which is far from over.

My prediction on this price target holds true as we are just $2 short of the $125 mark in less than 2 years since that post. Back then, I received plenty of opposition to my post. While the headline "Oil is Cheap" might not have held true to historical prices, what I meant all along was that oil was cheap back then relative to the price of oil in the future. And guess what? I think oil will be higher in two years than it is now. I think in two years, we will be closer to $200 and gasoline will be $5 in California.

-- Faisal Laljee
Full Disclosure: I do not own oil as a commodity or any of the oil ETF's although my position can change anytime without notice.

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Published Thursday, May 08, 2008 8:23 AM by Faisal Laljee
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The above content is provided for educational and informational purposes only, does not constitute a recommendation to enter in any securities transactions or to engage in any of the investment strategies presented in such content, and does not represent the opinions of Zecco or its employees.


RSSRSS Syndication Feed

Or, add this feed directly to your favorite reader by clicking the button below. That way, you’ll never miss a post.

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StocksandBlogs.com
StocksandBlogs.com provides stock tips, equity research and markets commentary. This site will give you investment ideas that you can apply to your financial portfolio. By sharing my money making stock tips and research, I hope I can help you manage your wealth better - whether you are a long-term investor or looking for a quick trade, a bull or a bear. From Wall Street to Walmart, Commodities to Foreign Exchange, you will find it all here. My name is Faisal Laljee and you can email me anytime at flaljee@mail.stocksandblogs.com

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