$100 Oil is a Guarantee due to Iran
Expect Oil Prices to Spike through $100 En route to $120 to $180
$100 is a good initial target price due to the fact that it is both a nice round number and also very close to the all time inflation adjusted high price of oil during the Iran hostage crisis of December of 1979. While many are focused on $100 I can assure everyone that oil prices will not stop at the century mark.
The shockwave simulation conducted by the U.S. government in June of 2005 indicates that, "a roughly 4 percent global shortfall in daily supply results in a 177 percent increase in the price of oil (from $58 to $161 per barrel.)"Current estimates are that Iran alone pumps nearly 3.9 million barrels per day or 5% of the worlds daily production.
Look at this chart to get an idea of what happened to oil prices in December of 1979. We are on the verge of a crisis that is 100X more serious than the simple taking of hostages. The western world will soon be in a showdown with Iran in order to prevent a madman from having nuclear weapons. Expect to see a super spike similar to the one that was encountered in December of 1979.
Overnight prices have already risen past $69 in Asia. Don't be surprised to see prices for a barrel of crude oil to close above $70 in trading on Monday.
What does this mean for Arena Resources
Arena Resources (ARD) shares will continue to gain value as the price of oil rises. Clearly ARD stands to benefit as it has a large reserve base and production is going to rise dramatically in 2006. The timing could not be better. My 12 month price target for ARD of $50 was initiated on November 17, 2005. Any significant rise in oil prices will force me to raise my price target. Even if oil prices stay flat at current levels my $50 price target will have to be revised higher if my Q4 production estimates are achieved.
I would encourage everyone to read, "The Oil Factor" by Donna Leeb and Stephen Leeb. The book gives a good history of how shares of oil companies benefited investors portfolios during the 1970's and early 1980's.
Expect Oil Prices to Spike through $100 En route to $120 to $180
$100 is a good initial target price due to the fact that it is both a nice round number and also very close to the all time inflation adjusted high price of oil during the Iran hostage crisis of December of 1979. While many are focused on $100 I can assure everyone that oil prices will not stop at the century mark.
The shockwave simulation conducted by the U.S. government in June of 2005 indicates that, "a roughly 4 percent global shortfall in daily supply results in a 177 percent increase in the price of oil (from $58 to $161 per barrel.)"Current estimates are that Iran alone pumps nearly 3.9 million barrels per day or 5% of the worlds daily production.
Look at this chart to get an idea of what happened to oil prices in December of 1979. We are on the verge of a crisis that is 100X more serious than the simple taking of hostages. The western world will soon be in a showdown with Iran in order to prevent a madman from having nuclear weapons. Expect to see a super spike similar to the one that was encountered in December of 1979.
Overnight prices have already risen past $69 in Asia. Don't be surprised to see prices for a barrel of crude oil to close above $70 in trading on Monday.
What does this mean for Arena Resources
Arena Resources (ARD) shares will continue to gain value as the price of oil rises. Clearly ARD stands to benefit as it has a large reserve base and production is going to rise dramatically in 2006. The timing could not be better. My 12 month price target for ARD of $50 was initiated on November 17, 2005. Any significant rise in oil prices will force me to raise my price target. Even if oil prices stay flat at current levels my $50 price target will have to be revised higher if my Q4 production estimates are achieved.
I would encourage everyone to read, "The Oil Factor" by Donna Leeb and Stephen Leeb. The book gives a good history of how shares of oil companies benefited investors portfolios during the 1970's and early 1980's.
posted by -Aztec- at 10:24 PM
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