Interview With Tim Maverick: More Downside Ahead for Oil Prices
Editor’s Note: Tony Daltorio, Wall Street Daily’s Senior Correspondent who writes under the name Tim Maverick, recently appeared on America’s Web Radio to discuss oil prices. Listen to his take below.
“Do not trust this current rally.” That’s Wall Street Daily Senior Correspondent Tim Maverick’s advice to us on the current surge in oil prices.
Energy speculators on Wall Street recently went back and forth in their positions on oil. Currently, they believe that oil is on the up-and-up.
While most analysts seem to believe that prices have bottomed out, and that all we have to do now is wait for the upside – that’s not what Tim Maverick sees.
Tim is firm in his forecast that oil may rally in the short term, but in the long term we’re going to see more downside.
But what’s the basis for his prediction?
This is essentially a way to store oil without using storage tanks, by just leaving it in the ground. Companies drill wells that they know are good, but they don’t actually bring the wells online.
But they will. The plan is to activate the wells when prices stabilize. And once the wells come online, the market will be flooded once again.
Once these wells are brought online – it takes less than 80 days – 170 wells could be brought online every month to produce an additional 500,000 barrels per day.
“That’s just too much supply for the current demand,” according to Tim.
And what about oil from the Middle East?
Production there is going to increase, too. We know that. Iran is increasing production now that sanctions have been lifted.
Last September Iranian oil minister Bijan Zangeneh said, “The drop in prices won’t be a concern for us. It should be a concern for those who have replaced Iran [market share].” And just before the New Year, Zangeneh reiterated that Iran would cut prices in order to regain market share.
So between the U.S., Saudi Arabia, and Iran, the market’s going to be pumped full.
Bottom line: The average investor shouldn’t be pumped about oil in the long term.