Oil prices headed for $30, Bank of America says

WVPATX

Freshman
Jan 27, 2005
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I don't think it drops that low but trader sentiment is very bad right now. I think the traders expected OPEC to actually make more cuts in production at their recent meeting and while they extended existing levels of production (below peak), they did not make additional cuts. Now Libya, Iraq and Nigeria are over producing and the traders don't like that.

The reality is that the Saudi's are going to IPO Aramco. To do so, they need much higher oil prices to get as much value as possible out of that IPO. If by the end of summer we do not see higher oil prices, I look for OPEC to actually cut production to get prices higher again prior to that IPO. For a patient investor, if oil dips below $40, I would be a buyer. They pay nice dividends and if you invest in great balance sheet companies, you can do very, very well by playing the long game.