Ep. 355 – The Oil Conundrum

The Kapital News
The Kapital News
Ep. 355 - The Oil Conundrum

Well it’s not a conundrum to us here at The Kapital News nor to our audience, but to many out there in the media and in Washington, DC, somehow think that the recent decision by OPEC + to cut production by nearly 10 million barrels per day would lift prices. They haven’t. And in fact, during today’s trading session, WTI and Brent were both down several percentage points at their respective lows. Why? Simple, because there is no demand globally and the world is awash in oil and gas. So much supply, that storage facilities are near their max and oil tankers are filled just sitting at sea with nowhere to go. Despite the 10 mbpd production cut, which may last through June, there is the possibility of this number increasing to nearly 20 mbpd if non-OPEC producers cut production as well. Since the global economy is going to continue its downward trajectory, the demand for oil and gas will continue to deteriorate and with it the price thereof. However, what is also likely to happen in this situation, would be further production cuts. This is what you call re-balancing. Markets attempting to find equilibrium. Government involvement and cartel actions do not need to occur in order for this market process to occur.

Ancillary to this, yet still connected, are the global protests that were taking place prior to COVID19. Interestingly, many of these very countries are highly dependent on oil and gas for the bulk of their revenues. If times were tough before COVID19, then how do you think times will be following COVID19? As we have been stating for months – these protests are not transitory – they are history in the making. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Oil #Recession #Gold #Debt #USA #Depression #Bonds #Bailouts

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