Oil prices are crashing.
Last checked, crude is down to nearly $20 barrel thanks to far too much supply, and not enough demand from the global community. “The global oil industry is facing its biggest demand drop in history, with traders and analysts forecasting crude consumption could fall as much as a quarter next month because of widespread lockdowns across the western world as the pandemic spreads,” reports Financial Times.
Should oil fall even more, it could easily drive American producers out of business, and destroy the U.S. shale boom. That’s what Sen. Ted Cruz and other GOP senators told Princess Reema bint Bandar bin Sultan bin Abdulaziz Al Saudl, as noted by CNBC.
“We said. ‘Look, there are a whole series of steps we can take to escalate foreign policy pressure’ — and we outlined a number of them — ‘if you continue engaging in economic warfare against the United States, trying to drive down the price of oil in order to exploit this coronavirus crisis to drive a bunch of American producers out of business.’”
In an attempt to help. President Trump said he’s planning on calling Putin to discuss the price war. “Russia’s got a big problem with that too, with the virus, so we’ll be talking about that, but literally that’s my next call,” Trump said, as quoted by Bloomberg. “I never thought I’d be saying that maybe we have to have an oil increase, because we do.”
At the moment, there are no signs of thawing oil tensions between the Saudis and Russia. Worse, with oil demand falling 20% a day thanks to the coronavirus, the outlook for prices remains dire, near-term.
Blood in the Street Opportunities
Once virus fears and the oil war are behind us, we may be left with quite a few “blood in the street” opportunities, like Exxon Mobil (XOM) and Chevron (CVX).
Since Feb. 2020, Exxon has fallen from a high of $70 to a low of $30, which is unsustainable. The last time XOM was this low was September 2004. CVX just fell from $113 to a low of $52. It hasn’t been this cheap since 2015.
Both are severely oversold, and may soon be great blood in the street opportunities.
Stay tuned for more on both of these potential trades.
