Oil war over but the virus seems to still control price action Many seemed to believe with the oil war over and the 10 million cut in supply that this would’ve caused price action to rise at the next opportunity. I mean Algo’s would have driven price higher off this kind of news right?
The worlds industrialized nations have been filling their tanks as oil was falling—now that the world oil production agreements have come to agree to cut current production the real question is, was it enough, and how do those countries heavily dependent on oil put more oil into the already full tank when the virus caused demand caused it to drop off in such a large way?
Everyone is hoping that oil demand and the virus slowed global economies will quickly bounce back to what was before. So there the rub for investors. Will it? And to what degree will a bounce back look like?
Personally I’d like to see a bounce in oil. I also see a huge opportunity at current prices seeing now that the oil war is over and price action is little changed today. Seeing still lower prices is posable with this kind of reaction to the ending of the oil war, but more importantly lower prices to me means a even greater buying opportunity. After all one only needs to ask one’s self, how low will oil prices go when the global economy needs it so bad? Sure one can argue what about green energy taking from oil demand and causing it to go lower still. Or at best for the near term slowing demand farther net alone farther into the future? Wouldn’t that also contain oil prices?
In my view with ultra cheep oil prices this will cause trouble for green energy And slow it growth substantially. A better case for green energy is when oil prices are above 70 dollars—but with the global economy getting the kick in the nuts from covad 19 I think OPEC needs to cut production farther still to drive prices past the 33-36 dollar range. Sure all of the stimulus packages will cause future inflation and a rise of oil prices certainly, but the heavy cost to green energy will rise as well. In short the global economy needs oil and price of oil will be dependent on it demand.
Long and short of it is in my view, oil prices will not go to zero! So with every decline in price from right here ( around 21-22 dollars as I wright this post ) I’d be a buyer on dips, and a partial seller on rips, but with the idea to be a longer term holder of oil. You see the last time oil saw these kind of prices the WTI was around 20 dollars in 2003-4 and then popped up past 100 dollars in a few Short years later. I’m not saying it’s going to happen like that again. But in setting the odds what is the likelihood of...
Oil going to zero?
Oil still declining in prices to maybe a new low price?
Or oil climbing some, then trading around a range and then climbing more?
I see these questions as 0%, 50 / 50 %, and more then 50% respectively as my odd setting. With an impossibility of oil staying so cheep in the long term.
Plan your trades and trade your plans.
In trading you either make dust or you eat dust!
All the best my trading friends.
This post is my views and my ideas to how I see oil prices in the future. It is not trading advice! Trade if you will with your own risk tolerances and by using your own personalized trading plans.
All the best to you and your trades.
