After watching the Fed buy unlimited securities, I now believe oil will go to 300/barrel
It's a wild world out there!
I'll sell you all you want for half of that right now.
It will eventually go to $300 but my target is $245 before a major correction and then back up to $350. I see $350 in 2026.
You guys would make good climate activists, projecting the apocalypse in 2030 if we don't stop using fossil fuels................while we experience the best weather/climate in the last 1,000 years during the current climate OPTIMUM (-:
I've said this before. I'll say it one more dayum time. The economy will collapse long before oil hits 300/barrel. Much over 100 may do it. 150 probably would!! 200 would!!!! 300/barrel is absolutely implausible. And when we can't afford to leave or heat our houses......
If anyone is ever to take this site seriously, this kind of talk must be identified as the nonsense it is.
Cheap, abundant, reliable and power concentrated fossil fuels are the life blood for the economy of most developed country's in the world.
We saw what the very brief spike to $150 crude did in 2008.
Everything related to our economy is connected to the availability and cost of energy.
The only way that $300 crude makes sense is if inflation is 100%/year and in 5 years, people's average income goes from 70,000 to 350,000 and everything else goes up 500% in 5 years but that makes no sense............so richard, as much as we have enjoyed your predictions for $200-300 crude oil for 8 consecutive years here, there isn't anything that makes sense (TO ME) to support it..........but I don't know alot of things.
You once provided us with a well thought out video explaining your reasoning for this outcome that seemed to make sense.
Do you have anything like that or solid reasoning to for this position in 2020?
My logic as convoluted as it may be is this:
The Fed is determined to buy every security in sight
Billions, not in a week or month but days
The treasury is in agreement with this buy everything
I really think the Fed is dumping untold trillions down a bottomless pit, but that seems to be the plan
Until/unless the Fed stops unlimited trillions to infinity we will have inflation, huge inflation and a deficit out of control. The Fed is monetizing the debt
Did you know you can not buy physical gold as of now
The comex says the gold is merely out of position
Well I have the theory that gold is being hoarded
Russia, India and china have been big time buyers of gold for several yrs
That is why I posted in an earlier post to not own paper gold
There is no delivery of physical if you want to convert your futures into gold
And trust me, a lot of big time investors have dumped stks and bought gold
So: between some large investors and countries hoarding gold we have a problem. Gold will increase in value until physical gold can meet the demand. That usually spells inflation
Add to that, what ever it takes Fed buying or infinity forever, we have the perfect storm brewing
Nobody thinks inflation is possible until it happens. Yes oil has devalued, but how long do you think that will last Russia just bought the assets of venezuala oil production. Would Russia buy a sick puppy if oil is going to stay at 25-30 for any length of time??? Russia could chnge the price of oil in a matter of months, if they want to really get serious. But for now, low oil prices serves a purpose. Saudia needs higher oil prices much worse than Russia, so who blinks 1st. You can bet putin is not going to blink. His country is capable of coping with hardship. Heck most every family in russia were born with hardship. So what else is new?? Not so much in Sadia
I might be wrong, but if the Fed turns off the money spigot, the alternative is a depression, and my bet is congress will allow the Fed to buy unlimited securities, to avoid a depression
Now the rest of the world won't stand by idle, they will also print, in fact, the EU for one, they are printing now. Germany, the U.K
So: we have several possibilities
Print and everybody else does so that everybody has inflation but it is all relative if soda costs 1.00 10.00 or 100 in Germany and the USA
We could have a severe disruption of business as people pay off debts and don't spend. Once again the Fed is buying stks, lending low cost loans etc. to prop up the economy in an effort to not let Boeing go broke, plus 1000's of other business that need a bailout. This all increases the money supply and inflation. Heck the farmers are in a snit because they got left out of the gov't free money for everybody except a few select farmers. Now doesn't that tell you what will happen, as everybody wants to get on the free money train. Of coarse Boeing, the cruise lines etc will say they need more and there will bee more free money. You might have to pay a loan off with zero int or you might turn it into a grant. Why not, this is insane but I don't see anybody saying this money for jobs is a bad idea.
Another possibility is that china is open for business but nobody wants to buy when we are unemployed or struggling to pay off debt during our enforced furlough. China can't produce with out customers, so they dust off the trade agreement and say to Trump. We will live up to our promise to buy your ag products and other things, but trade is a two way street. You have to honour your part of the trade deal so get with it and buy our stuff. Well, if the people are busy paying back rent, missed car payments etc, the Fed has to figure out a way to goose the economy. There is only two things the Fed can do when you cut he crap and get down to the bottom line. The Fed controls int rates and if the treasury and congress agrees, then the Fed will print unlimited dollars and increase their balance sheet.. Trust me, congress and the treasury will agree to printing dollars if the people demand the gov't do something to save jobs, business etc. It's insanity but water takes the route of least resistance and so will congress and the treasury
I see no possibility that the Fed will suddenly shut off the money spigot. There will be too many businesses that need bail outs, loans and lordy help us if the student loans are forgiven, social security cheques are increased due to higher prices, the health care system will be in for an over haul of some sort, you can bet on that and my bet is the gov't will end up paying for this health care change. People will riot if faced with increased health care premiums, and nobody wants to lose the next election, because the health care system needs more of your dollars. So guess where that increase in money will come from
We can pay 300 for oil if all else is relative in price
Price is relative, if a can of soda costs the same for you and me. Just don't get any free money that I don't have the same opportunity at the gov't trough. You can have some if I get my share and who cares if we both pay 300 for oil so long as what we produce/sell etc. is relative in price.
Now I know you will say this isn't possible but if so then give your reason why the Fed printing trillions of dollars will not have some effect on prices of everything
We have seen so many things people thought was impossible, all in a matter of weeks, months at most
Just because it seems impossible doesn't mean it can't happen. I think that has been proven beyond any doubt
It's possible that crude would hit $300(though odd seems incredibly low)
So what would be the price of gas then...... $12/gallon?
The price of everything that uses fuel to transport......which is almost everything, will soar much higher.
It's not like we are going to start running out of crude and need to ration it because of the shortage. There should be plenty for years to come.
Shale oil would make a killing well before we got to $100.
Seems like the laws of demand/supply would prevent crude from ever getting close to that price.
I have to agree with you Wayne. When I first heard of the scope of the "rescue" package, I thought out loud that the Fed is finally going to hit that inflation elusive inflation target - and then some.
$300 oil might not be very far-fetched in a few years, as everything else may also cost multiples of what it does in today's dollars.
Hi matt, great to read you!
This is unprecedented by such an extremely wide margin that we can't use previous events or rules to judge by.
Maybe you guys will be right and a few years from now, when we have $300 oil and hyper inflation, everybody will look back and say that it was inevitable because of what we did in this current time frame to save the economy.
talking about exploding oil. was looking at some $100 calls in WTIC for July 2020 which expire in mid June, just 2 1/2 months away. You can not buy them for $0.01. I DID buy 20 of them a FULL MONTH ago when oil was $25 HIGHER, but NOT today. Can not believe that. WTIC at $20 and $100 calls are $0.01 BID // Offered at $0.03. . . Ouch.