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Alan Gaines (Twitter @alangaines) speaks with Live Trading News on Oil Prices: Iran, Israel and China
LTN- Can you give us your thoughts on short and longer term oil prices?
AG- I continue to believe that the short term price of crude oil is overextended, since touching a high water mark of $110.55 on 1 March, given the following:
- IEA crude oil inventories rose again, by 9 million barrels versus a consensus of 2.2 million barrels. This was the largest one week rise since 2008, and comes on the heels of a 7.1 million barrel increase the previous week. Supply disruption fears aside, there is plenty of oil around.
- Friday's weak jobs stats continue to raise concern about the future intensity and continuity of higher US economic activity. Employment increase was the weakest since November of last year. The unemployment rate fell to 8.2%, likely as people left the workforce, while workers toiled less hours.
- On 14 April, paper tiger Iran will meet with the US and the five other permanent members of the UN Security Council (China, UK, Germany, France, and Russia) regarding that country's nuclear policy. The last such meeting was back in January 2011. This could further take the edge off Iran's belligerent statements regarding closing the Straights of Hormuz, this affecting global supply.
- A possible release of global supply from the SPR would tend to depress prices over a very short term.
- China's latest report shows consumer prices rose 3.6% versus a year ago, higher than expected. This in turn could limit the government's ability to further stimulate growth. China is the second largest consuming nation in the world, of course behind the US.
I continue to believe WTI will trade in a $90 to $110 per barrel range for the next twelve months. Longer term, such uncertainties as Israel's tolerance towards Iran's uranium enrichment activity could lead to conflict, which would destabilize the region and certainly raise prices quickly.
In addition, a soft landing economy in China, and resumption of US economic growth will lead to higher crude oil demand. All this will renew demand growth for crude oil, and likely send prices upward towards pre-recession levels of $147 per barrel, within three years.
Alan D. Gaines is presently Chairman of the Board of Directors and CEO of Gaines Energy Holdings, Inc., a privately held entity housing merchant banking activity (through wholly owned affiliate Proton Capital, LLC) as well as Dune Operating Co., which houses the oil and gas interests of A.D. Gaines. Gaines Energy Holdings has interests on and offshore Louisiana and Texas, central Utah, and California.
Mr. Gaines served as Chairman of the Board of Directors, and founder of Dune Energy, Inc. since its formation in May 2001 through April 2011. Mr. Gaines also served as CEO of Dune Energy from inception through May 2007. In May 2007, Dune Energy completed the acquisition of Goldking Energy Corporation for $327 million, raising total proceeds of $540 million in senior notes and convertible preferred stock, as well as refinancing existing indebtedness in conjunction with the acquisition. Concurrent with the closing of the Goldking transaction, a new CEO was hired to oversee day to day operations.
Mr. Gaines has approximately 30 years experience as an energy investment and merchant banker, and has participated in the raising of debt and equity totaling tens of billions of dollars during his career. An acknowledged expert within the oil and gas space, over the years Mr. Gaines has been quoted by numerous oil and gas industry periodicals, as well as a multitude of magazines and newspapers on a global basis, such as The Wall Street Journal, Barron's, The New York Times, Forbes, Fortune, Business Week, Financial Times of London, The Houston Chronicle, Platt's, etc..
In 1983, he co-founded Gaines, Berland Inc., a full service investment bank/advisory and brokerage, specializing in global energy markets, with particular emphasis given to small to mid capitalization public and private companies, involved primarily in the exploration and production of oil and natural gas, as well as midstream (pipelines and transportation) and downstream (refining and marketing).
In the three years prior to selling his personal stake in the company, Gaines, Berland acted as lead underwriter and/or participated in the placement of more than $3 billion of equity and debt securities. >From 1984 through 1998, Mr. Gaines was Chief Advisor to financier Carl C. Icahn in all of Mr. Icahn's investments within the energy space, including such highly publicized forays as Texaco, Phillips Petroleum, Unocal, United States Steel (Marathon Oil), Tenneco, Williams Cos., Western Company of North America, etc..
Mr. Gaines holds a B.B.A. in Finance from Baruch College (CUNY), and an M.B.A. in Finance (With Distinction-Valedictorian) from The Zarb School, Hofstra University Graduate School of Management.
An ex session and touring guitar player, Mr. Gaines was born in Brooklyn, New York, and currently resides in Beverly Hills, California.
Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.
Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.Read the Terms of Service