My Talk With John Canally: Iran Nuke Deal Good For Oil Prices?

Benzinga recently had a chance to speak with John Canally, Senior Vice President and Economist at LPL Financial, about the current state of the U.S. economy following the disappointing March jobs report.

Among the topics Canally covered was his outlook for crude oil prices.

Is The Bottom In?

Prices have been in the upper $40 to lower $50 range for the past several months, prompting many analysts to declare that the drop in oil prices is over.

Shares of the United States Oil Fund ETF USO 2.11% are down more than 50 percent in the past year, but have been mostly range-bound between $16 and $20 for three months now.

Benzinga asked Canally if he believes that oil has already established its bottom. Canally pointed out that each of the last six or seven times oil prices have declined as much as they have in the past year, it has taken two to three months for oil to set a solid bottom.

“The initial bottom [this time] was hit in late January, and we’re here in the second week of April, so you’re past that two-month period. If you look at a chart, it does look technically like oil has found some support here,” Canally added.

A Word Of Caution

Canally cautioned that crude oil’s bottoming process doesn’t necessarily mean that it’s time to rush in and buy oil. “We could be in for a U-shaped recovery where oil bounces between $50 and $60 for a while before resuming an upward trend.”

Potential Wildcard

Canally also noted that a geopolitical event, such as the Iran nuclear talks, could be a potential wildcard when it comes to oil prices. While intuition suggests a deal that involved bringing Iranian oil back on the global market would hurt oil prices, Canally explained that it might not be that simple.

“An Iran deal could be what sparks the oil rally when the uncertainty is removed from the market.”

Read this article and all my other articles for free on Benzinga by clicking here

Want to learn more about the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common SenseI don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!