Daily Gains Letter Comments on Oil Prices & Gives 2 Profit Strategies as Oil Price Dips

Daily Gains Letter addresses the drop in oil prices and suggests two strategies to profit.

Daily Gains Letter (www.DailyGainsLetter.com), an e-letter published by Lombardi Publishing Corporation, a 29-year-old consumer publisher that has served over one million customers in 141 countries, is releasing its comments on the current state of oil prices and providing two profit strategies for investors as oil dips below $50.00.

“The energy sector was dismal in 2014 and it is looking like we could see more of the same for this year,” says financial analyst George Leong. “At less than $50.00 per barrel, oil is at its lowest level since early 2009. Investors long on oil might want to consider two strategies that can help them profit from the recent drop, namely put options and futures.”

Leong explains that there are a number of overarching issues that will continue to put pressure on oil prices: the excessive supply overriding the declining demand as major global economies struggle; China announcing that its gross domestic product (GDP) growth would fall to seven percent in 2015; the eurozone teetering on another recession; and Russia already heading for another recession in 2015.

On the supply end, Leong observes, there’s the massive flow of shale oil that will ultimately help to make the U.S. independent of the Organization of the Petroleum Exporting Countries’ (OPEC) oil, but will pressure oil prices in the near future. On top of that, OPEC refuses to cut production and non-OPEC oil producers Russia and Iraq have announced their intentions to increase oil exports, which will place further pressure on the price of oil.

“West Texas Intermediate oil prices are currently sitting above $48.00 per barrel, with the next support level at $40.00,” he adds. As we move forward this year, Leong sees little support for oil unless the global economy can reverse and expand. It doesn’t look that way at this time, so he expects oil prices to falter.

“A decline to the $40.00 range may make it more interesting to play the long side for speculators. If investors play the trend, there appears to be more downside risk at this time,” Leong concludes. “There are two possible strategies investors could consider: an example is to play the downside via put options on an oil-based exchange-traded fund, whereas more experienced traders could consider playing the downward pressure on oil prices via the futures market.”

For more information on Daily Gains Letter, visit www.DailyGainsLetter.com. Lombardi Publishing Corporation (www.lombardipublishing.com), founded in 1986, has served over one million customers in 141 countries. It is one of the largest consumer information publishers in the world.

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Release ID: 72072