RE:RE:So What are the Headwinds For OilBigbear7405 wrote: I don't see the dollar strengthening as short term. They are planning on raising rates for two years.till 2024. That is when they assume inflation will drop to 2%. We are looking at north of 5 percent at least. I studied the 2008 recession when i did my undergrad in accounting. We didn't have that bad inflation back then. What we have now is really bad. The worst since the early 80s. Governments across the world need us to stop spending. Rasing interest rates makes us focus on saving and paying down debt. Why buy a house now when it will be cheaper in 2 years for those who have money. Bond market was a waste of time for so long. As you raise interest rates the bond market becomes more interesting. Equities was the only game in town since 2009. Now you will see money leaving equities and going into bonds as a balancing act for the first time in a long time. The worst month for stocks has always been september. The only month with an average loss over 60+ years. Not all but most. This one could be bad. If not then the next one will be chaos.
Experienced wrote: Short Term
1...strengthening US dollar
2....demand destruction in a recession
Worst case for the US dollar is about 10% and in a recession 3-5%. If both happen we could see a price around 85 a barrel.
Long Term
Increasing movement to EVs
Hard to predict but likely somewhere around 15% less oil demand and much lower oil prices
With all due respect bear you are missing the point.
YTD - the US dollar is up about 17% vs the Euro. This has been one of the factors that oil prices have fallen from their peak in early March.
The Fed plans on increasing interest rates this month by 75 or 100 basis points. The ECB will raise interest rates this month by 25 or 50 basis points. Either in August or September The Fed will raise rates by another 50 or 75 basis points and ECB will likely not respond due to concerns about a recession. The combination of these two will put upward pressure on the US$ vs the Euro. Emerging market economies aren't raising rates at all.
A couple of days ago I bought Euros at par and that hasn't happened for over 20 years. As an example, last year I bought Euros for a trip to Spain at 1.18 per US$.
What I said in an earlier post is that oil prices have gone down due to the strong US$ is short term and provides an opportunity to buy oil stocks on sale due to lower WTI prices which what I am doing. I also bought a pile of Euros the other day and realized an overnight gain of 2%. That said I am poised to reload if the Euro goes down to 90 cents that some analysts are predicting. If that happens then oil prices will by a similar amount and stocks like SU will be screaming buys.