Friday, April 17, 2020

Oil
Price Smash!
Oil Rig Dangers: Work-Related Fatalities and Safety | SDS Blog
Oil is the poster child of the forces driving massive deflation: overcapacity / oversupply and a collapse in demand. Overcapacity / oversupply and a collapse in demand are not limited to the crude oil market; rather, they are the dominant realities in the global economy.

DYI:  Oil as measured by West Texas Intermediate as I’m writing this post 9:22 A.M. 4/17/20 is trading at $17.51!  As compared to 5 years ago at $55.74 prices from that time till now has dropped by a staggering 69%!  If oil prices go single digits [I have no idea if they will or won’t] then oil and gas shares will be at “the give-away-table.”  Prices when corrected for inflation will be far cheaper than the 1998 price smash.
Historical Oil Prices Chart
As of 4/17/20
$17.51
For those of you with 401k’s that have an oil/gas energy sector funds this is a great time to dollar cost average at very low prices.  Recovery for oil prices may take months especially if the U.S. experiences a deflationary smash.  That is great as that will allow you time to build a position with some size.  My favorite of course is Vanguard’s Energy Fund symbol VGENX current 6.42% yield. 

You will know that you are close to the bottom when see headlines almost daily discussing the demise of the oil and gas industry.  Below is such an example.

Why oil prices will never recover

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DYI

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