Overall – Bullish on Oil
May 25, 2020 Leave a comment
by Rob Zdravevski
May 25, 2020
Basic thesis is…
Petro-nations need petro-dollars,
they can’t live with a $30, nor $20 oil price,
my view is the March 6th Saudi and Russia stoush was a concerted effort to disarm U.S. shale supply,
main aim was to knock the U.S. off the perch of their temporary and “artificial” status of #1 oil producer,
that status was achieved on shale production,
it was a tactic (not only geo-political) but OPEC centric to dethrone a non-OPEC nation from being a net exporter
worldwide Oil Rig count has fallen at least 33% (see link)
also there is little to no new capex
in turn, reserves been depleted in past years,
replacement discoveries are lagging,
then add a premium for rising geo-political tensions
Regarding price action, following the rapid decline, the actual oil price needs to “work itself out”.
Currently,Brent is trading at $35.50 and Oil is still in rally within a bear market…..
following the snap back, Brent needs to close and break above $37.10 to test the $43 mark
Failing a breach above $37, the $29 mark is a plausible level to pullback to coupled with a few weeks would also marry a view of consolidating the recent volatility.
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