As Yaser Anwar points out, from a technical perspective oil is done for now, as it hit an intermediate top on July the 14th at $78.40. And William Trent highlights that oil inventories continue to rise. However, Faisal Laljee explains why he thinks oil is cheap at $75 a barrel. Jim Rogers says oil prices will reach $100 a barrel, possibly this year, and adds:
Unless somebody discovers something very quickly and very accessibly, we're all going to be dumbfounded at how high the price of oil will go, including me.
Francisco Blanch, head of commdities research at Merril Lynch, said in a July 17 interview:
It's unlikely we will see another price rally from here, unless the current conflict expands beyond its current borders. You'd need physical disruptions, and large ones, to bring the price to $100. You'd probably need to lose Iran.
$100 a barrel seems to be a magic number for commodity investors as the number of options to buy crude at $100 this year is currently at 53,047, triple the amount on April 21, for the September through December contracts (Source: Bloomberg).
The chart below shows that oil generally has a strong seasonal period from July to October.
Oil´s seasonal strength from July to October is heavily influenced by hurricanes and the hurricane season is now fast approaching. As Elliot Gue, Editor of the Energy Strategist, points out in this piece:
Hurricane activity tends to move in multi-year cycles. Unfortunately, most meteorologists agree we’re now in the midst of a more-active Atlantic hurricane cycle, meaning there’s potential for a larger-than-normal number of major hurricanes to strike the Gulf of Mexico this summer.
In 2004 oil peaked in October; in 2005, it reached it highest price in August.