What’s Next For Oil As Prices Go Negative?

Oil prices crashed through zero, closing out the day at -$37 per barrel, an unprecedented meltdown.

There are mitigating circumstances to these insane numbers. The prices for WTI reflect the contract for May, which expires this week. The collapse is a reflection of traders abandoning the May contract, and moving on to June. The thinly-traded May contract loses some relevance, and analysts say that the June contract – trading at $20 per barrel as of Monday – now becomes the important number to watch.

Nevertheless, it is hard to ignore the historic numbers flashing across the screen. As futures contracts expire, they tend to converge with the realities of the physical market. Prices went negative because the physical market in Oklahoma and Texas is so overwhelmed. OPEC+ did agree to historic production cuts, but not for April. In any event, the cuts pale in comparison to the decline in demand. But taken together, the effects of the price war on the supply side are colliding against the depths of demand destruction at the same time. READ MORE (We reminded you of the danger 2 days ago in our blog NIGHTMARE

TECHNICAL CAHRTS

Oil crashed to $0; and the Ripple have started

Russia Races To Squeeze The U.S. Out Of Asian Natural Gas Markets

The increasingly close relationship on multiple levels between Russia and China became obvious to anyone with an interest in such matters last July when the two countries staged their first joint air patrol in the Asia-Pacific region, sending the air and naval defences of the principal U.S. satellite countries in the area – Japan, South Korea, and the Philippines – into panic mode. At the same time, the two countries continue to push ahead with their game-changing US$400 billion ‘Power of Siberia’ gas project that will move at least 38 billion cubic metres of gas annually for 30 years from the Chayandinskoye and Kovyktinskoye fields in Eastern Siberia to Northeastern China. Last week saw major announcements from Russia that now that China is apparently past the peak of its coronavirus outbreak, plans for the project are moving quickly ahead and are being expanded in scope and scale. More bad news ahead

TECHNICAL CHARTS – SHLPH, PCOR & PNX

PNX – is still fragile but the price is at discount – future earnings looks good
SHLPH – downside could be possibly over for now – Finwaze will start accumulating this share
PCOR is under-valued & FINWAZE have started to accumulate this company.

KEY TAKEAWAYS

  • Buy in tranches – don’t rush
  • All 3 companies are value for money for long term
  • We believe the future dividends will also be good moving forward
  • P.E ratio is under-value

Enjoy the Journey with Finwaze

FINWAZE TEAM

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