Cathie Wooden is looking for a drop in oil costs, likening the crude market to the extinction of whale oil within the early 1900s.
“The rise in oil costs this yr is a operate extra of provide than demand. On the flip of the twentieth century, whale oil confronted the identical destiny and whale oil costs fluctuated dramatically. If @ARKInvest‘s analysis is right, oil costs will undergo the identical destiny as whale oil costs,” Wooden stated in a tweet Thursday night.
The worth of U.S. oil has risen sharply this yr as demand recovers after dropping off throughout the coronavirus pandemic. U.S. West Texas Intermediate (WTI) crude futures sat round $74.38 a barrel on Friday, on monitor to publish their sixth consecutive week of features. The commodity is up greater than 53% in 2021. At one level throughout the begin of the pandemic, futures traded with a adverse worth due to the demand collapse.
Whereas many analysts and economists see the rise in oil costs as operate of elevated demand, Wooden postulates that it is because of disrupted provide. The innovation investor expects oil costs to say no simply as within the early 1900s, when whale oil costs drastically misplaced worth as different sources of gas changed it.
Lots of Wooden’s highest conviction corporations encompass applied sciences that bypass the usage of oil. Wooden is a bull on electrical autos and battery-related corporations. Total, the widely-followed investor believes long-term deflation will return as know-how continues to disrupt many industries throughout the board.
“That stated, based mostly on ESG mandates, pension funds are demanding that oil corporations reduce on capital spending whereas US banks, in response to the collapse in oil costs final yr, are denying fracking corporations of loans for capital spending, and OPEC is holding the road on provide,” Wooden tweeted.
In the meantime, the Group of the Petroleum Exporting International locations, or OPEC, stated earlier this week that they suppose oil demand will proceed to develop till 2035 even with cleaner vitality sources developed as growing nations improve use of the gas. OPEC then expects demand to plateau.
— With reporting from CNBC’s Pippa Stevens.
https://www.cnbc.com/2021/10/01/cathie-wood-compares-current-crude-market-to-whale-oil-predicts-it-will-meet-the-same-fate.html | Cathie Wooden compares present crude market to whale oil, predicts it is going to meet the identical destiny