Crude oil has been a fascinating beast over recent years including front month futures trading deeply into negative territory for the first time in history back in April 2020, this phenomenon was blamed on too many traders positioned the same way having to close out positions before the barrels of oil ended up on their doorstep – similarly as we’ve witnessed with interest rates across Europe moving into negative territory anything is possible in financial markets!
Once we take the COVID panic out of the equation oil prices are trading around their average price of the last ~6-years implying the sector is offering some value with the likes of heavyweight Woodside Petroleum (WPL) down ~40% from its 2018 high although we mustn’t forget the almost stampede away from fossil fuels by many large fund managers, a move which by definition will present deep seated value for the well timed opportunistic investor.
It’s this move away from Fossil Fuels which is likely to cap production growth and that is ultimately bullish for prices.
MM is neutral / bullish crude oil around $US70/barrel
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