I promised to discuss one reader’s concerns about oil, as it pertains to one Dr. Kent Moors, a recognized professor at Duquesne University. The comments and question below are in response to my article “Europe and Oil, An Interesting Mix.” In that article, I suggested oil prices would continue to drop in the near term. I based that conclusion on the currently rising supply, the currently lessening demand, and the possibility that Iran might allow IAEA visitors into its Parchin Military complex, thus possibly avoiding an oil embargo scheduled to begin July 1.
This article is a total contradiction to Dr. Kent Moor’s assessment of the oil situation in the coming months. He is calling for an oil constriction that will devastate Europe and ultimately hurt us all.
According to his dire outlook, oil is set to skyrocket by July due to many factors, among them the Obama administration sanctions regarding Iran. He claims that Europe will stand to lose 600,000 barrels of oil a day with no plan in place to replace the pending constriction. That in turn will push prices much higher, possibly doubling them, in fact so high [$200 per barrel] that all of the European countries will suffer, as we will here in America.
Nobody knows for sure how far the Obama administration will take these sanctions or if the European countries will follow his lead, but if it happens as Dr. Moor predicts, then it is contrary to your assessment. What are your thoughts on his outlook and is this really a time to be bullish on oil?
According to Dr. Moors’ own bio, he is an advisor on energy to global governments, six of the top 10 oil companies, and, as well, one of an elite group of 50 people in the world that know the future of oil. Seems mighty impressive, yup, that it does. In fact, he tells you, he has become rich off his global connections and inside knowledge, and now he wants to share his secrets with you in his newsletter. In his pitch, he tells you if you sign up with him, he can make you more money than you will ever need on trading oil futures without actually trading oil futures. All you need to know is his “secret” strategy. Do you get the picture?
Dr. Moors may be all that he claims, but he is also a salesperson pitching fear, fear of an impending oil shortage if the world embargoes Iranian oil. So, here is the question. If he is making so much money from his “inside” knowledge and connections, why is he is pitching a newsletter “that will make you rich?” I place no more stock in his prediction than I do any other oracle out there, even if he is connected to the elite of the elite in the world of oil. In fact, I stand by my own conclusion about the near term.
In the near term, increasing supply (Saudi Arabia and Russia pumping madly), lessening demand (Europe and China slowing), and loss of the fear premium (Iran and current negotiations), will keep oil prices down. As to what happens after July 1, I don’t know, but neither does Dr. Moors. He might be right if the embargo goes into effect, but he will be dead wrong if some arrangement is made with Iran that turns that option off.
FYI, as of this morning, WTI oil is trading in the $87 zone. The fear premium from Iran has, for the moment, left the stage, but in its place is the opposite fear – supply is overwhelming demand.
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