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jace lau

Oil production cut,will oil price go up?

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Yes, it means higher oil prices, but not by that much.

If Mark Mobius is right, and his observations of European retail around him hold, then there will be a V shaped recovery in high income country's consumption demand, then the stock market is right. I don't believe that China will be seeing that kind of behavior as I have seen in my own limited observations of the retail districts nearby, echoing Mobius' obseravations, as China is that much ahead, and is not seeing a retail revival in any way proportional to the previous decline. Demand is decidedly broken. PMI  reports from Caixin show that prices received are still persistently lower than prices paid. Meaning that China's value added continues to drop month after month since they opened in March.

After a tripling and then tripling again of US savings rates from approximately 4% to 14% and then to 33%, nearly 10 fold, there is doubtless an ability to increase spending in the US. The demographics favor it.

So that will eventually show up in some recovery in oil demand, which has already happened to a large extent - though not at all in air travel.

However, the lessened demand for Jet fuel is good news for LTO, as it would be the preferred source for refiners needing to produce less jet fuel in their output mix.

News from the shale patch is indicating wells being turned on and plans for resuming activity are hinging on long futures prices, as funding is dependent on being hedged, not on spot prices.

The chart is showing a bullish upside to $52 basis Dec. by the end of summer.


Continuing claims data indicate approximately 4 million/month hiring out of the fired or furloughed. No idea how long and to what extent that continues.  But it is not a bad start for recovery. It will have an effect on gasoline demand because these people are not going on public transport.


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