So it can be expected that crude oil prices may drop to the level of futures prices in the near future.
This column is dated July 8, 2022
West Texas Intermediate traded at $104 last Friday. It traded as low as $92 on Thursday. and was $97.54 on Friday. A weekly close under $99 is a daily trend downtrend.
As we write, President Biden is meeting with Prince Salman. During his campaign he labeled Saudi Arabia a ‘pariah’ for its alleged involvement in the death of Jamal Khashoggi. Now Biden’s team is pleading for more oil to lower gasoline prices in the US. It’s clearly on the minds of voters that gasoline prices will rise to $5-6 and food prices will rise.
As others in the energy industry have asked, why the trip to Saudi? Why not take a trip to Tulsa, Midland, Bismarck or San Antonio with its Eagle Ford Shale? Drop the regulations and war on all things carbon based. The high cost of jet fuel has certainly added to the chaos exhibited at the world’s airports. It is interesting to read intelligence reports that Putin and Xi are too angry at the president to use their country’s resources. What is the purpose of bribing the president against Iran when he threatens to ban it from going nuclear? The consequences don’t stop there. The euro currency has now fallen to parity against the US dollar as the EU fears that Putin will cut off natural gas supplies. This of course comes in the wake of Germany shutting down coal and nuclear plants. The message is simple. Trains, planes and heavy trucks run on carbon fuels and need them. No magic wand can replace them with wind and solar at night. But don’t expect that reality to shine on Team Biden.
Shares sold off this week but managed to recover on a daily basis. It would take nine columns in the WSJ to chart new lows today, so it’s low, for now stocks can be expected to rally.
There are rumors that the FED will probably raise rates next week. Bond prices have retreated over the past two days. We’ll see what happens next week.
Finally the prices of gold and silver have fallen to developing lows. Gold was at $2,075 in March and can now fetch $1,705. Silver topped $27.50 at the same time and has now fallen to $18.23. That means a 33% decline in four months. Prices of silver mining stocks are cheap in March 2021 minimum COVID. As world governments keep an eye on digital currencies, silver and gold are problematic and should see major lows soon.