Alex Sebastian

Forget $100 a Barrel - Oil Will Plummet to $30

I didn't take the time to read through all the comments on this page so forgive me if I am repeating some of the points already made by other readers.

After reading this piece I honestly think Mr. Schwartz should be removed from the Seeking Alpha list of authors. This piece was so poorly researched and thought out that it is an insult to the entire site, and it's readers. I am only going to point out the most glaring flaw in Mr. Schwartz' argument.

New oil is NOT plentiful. If you had any knowledge of the off-shore rig market, you would know that many of the rigs are being commissioned by big oil companies for EXPLORATION purposes, not production. This is a direct result of high oil prices (big oil is looking in places where it is very expensive to extract oil). Beyond this, while there have been some large new fields discovered, but they lie in harsh environments which result in very technically challenging drilling conditions. As a result oil is prohibitively expensive to extract from these areas. Many of these fields come online only with oil over $100 per barrel. With oil at $30 a barrel, there is almost no new oil coming into the market. With the megafields in significant decline, there will be a net loss in oil production, resulting in a higher oil price.

No matter how you cut it, $30 oil is an impossibility which will never be realized. I feel sorry for the investors in your fund if that piece is what you guys consider "due diligence".

My advice: stick to options trading. You seem to be excellent at that.