On March 10, 2021, a reader asked me "where" I thought crude oil was headed (with regard to price). My reply:
I've said often on the blog it's a fool's errand to try to predict the price of oil.
Having said that, the tea leaves suggest WTI / Brent are going to go much higher.
1. Saudi Arabia can't survive on $60-oil.
2. WTI/Brent are not back to where they were pre-pandemic.
3. Pre-pandemic we had a president who wanted much lower oil prices.
4. Post-pandemic we have a president who may not know what he wants, but his policies will push oil prices higher, all things being equal.
5. "Inflation" will push commodities higher.
6. US gasoline demand, according to GasBuddy, is already higher than pre-pandemic and most states have not lifted restrictions; summer driving season has not begun; and internationally, most countries are still in worse shape than the US with regard to Covid-19.
7. Articles in the mainstream media are being written by millennials; they are completely misreading the EV story. They appear to have no clue how 99% of electricity is generated.
8. Across the board, US E&P companies say they are more interested in focusing on growing free cash flow, not growing production.
9. If WTI can hold above $60 with these huge builds (last week, 20+ million bbls; this week, 14 million bbls) imagine what WTI should command once refiners get back on line and inventories drop.
I'm sure others can come up with nine reasons why WTI/Brent will slump to $20 this year.
Scrolling through social media tonight, it appears I am exactly correct. There are those who can argue that the price of oil with increase significantly by the end of the year; other say that we've seen the high and are now in a trading range, with a possibility that the price of oil will trend lower going forward.
From social media this evening:
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