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Strategies & Market Trends : Dino's Bar & Grill -- Ignore unavailable to you. Want to Upgrade?

To: Goose94 who wrote (81491)	4/3/2020 2:21:52 PM
From: Goose94	Read Replies (1) \| Respond to of 202883

Crude Oil: The COVID-19 outbreak has paralyzed the global economy, resulting in oil demand falling by the greatest amount in history (estimated to be down about 26 million barrels per day currently). Compounding the impacts of the demand shock has been the squabble between Saudi Arabia and Russia that resulted in the breakdown of the OPEC+ agreement and the Saudis surging “production” by over 2 million bbl/d. This has resulted in the oil price falling by as much as 60 per cent and many global benchmarks falling below cashflow break-even levels for producers, resulting in forced shut-ins (Canadian production could fall as much as 1 million bbl/d) as well as historic cuts to capital spending (global capex is down $90 billion so far this year). Year-to-date energy stocks have been crucified, falling by as much as 90 per cent in a matter of months. Will this soul-sucking experience ever end? For those who can withstand the volatility, energy stocks offer the potential for multi-bagger upside. The demand shock from COVID-19 will eventually pass and structurally we are entering into a very tight future for oil supply. Global offshore is entering into a period of multi-year plateau/declines due to years of insufficient investment (which will only get worse as companies like Royal Dutch Shell cut spending this year by a further $4 billion). U.S. shale has been mortally wounded and is unlikely to ever grow by more than 200,000 or 300,000 bbl/d ever again. We believe that oil can rally into the $50s or higher in 2021 and significantly higher in 2022 and beyond as the world gets hit by a supply crisis. Patience and a stomach of steel is required, but energy stocks were already trading at historically low valuation levels coming into 2020, and now they have fallen by 70 per cent. This too shall pass. Eric Nuttall on BNN.ca Market Call Friday Apr 3rd @ 1200ET