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Jerre Foo, Corporate Development Executive, Silkroad Nickel

Jerre Foo
Corporate Development Executive | Silkroad Nickel
50 Armenian Street #03-04, 179938 Singapore (SGP)

enquiries@silkroadnickel.com

+65 6327 8971

Silkroad Nickel: 'The course is set for dynamic profit growth.'


Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG

Dr. Thomas Gutschlag
CEO | Deutsche Rohstoff AG
Q7, 24, 68161 Mannheim (D)

info@rohstoff.de

+49 621 490 817 0

Interview Deutsche Rohstoff AG: "We can imagine additional investments in the field of electromobility."


Steve Cope, President, CEO and Director, Silver Viper

Steve Cope
President, CEO and Director | Silver Viper
1055 W Hastings St Suite 1130, V6E 2E9 Vancouver (CAN)

info@silverviperminerals.com

+1-604-687-8566

Interview with Silver Viper: Future price drivers and takeover fantasy


06. May 2020 | 05:57 CET

BP, Exxon, Shell, Saturn Oil & Gas - Crude oil up to USD 100 in May?

  • Oil
Photo credits: pixabay.com

In recent weeks, even experienced investors have learned a lot about the oil market. When the price of WTI slipped into the red in April 2020, this was a first in the history of black gold. On the one hand, the oversupply of producers put pressure on prices, but speculators also caused the distortions. It was a dangerous mixture on the expiry date of the May contracts. In two weeks' time, the June contracts expire and the price development is eagerly awaited, but this time it can also go the other way.

time to read: 2 minutes by Mario Hose


Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG

Full interview

 

Author

Mario Hose

Born and raised in Hannover, Lower Saxony follows social and economic developments around the globe. As a passionate entrepreneur and columnist he explains and compares the most diverse business models as well as markets for interested stock traders.

About the author


Speculators have gambled away

Crude oil is traded on the futures market in units standardized in terms of quantity and quality. A barrel is equivalent to 159 litres and a lot is 1,000 barrels. The contracts are traded on commodity futures exchanges, such as NYMEX in the USA. The WTI grade stands for Western Texas Intermediate and is considered the standard for quality in physical delivery on the expiration date.

Transportation and storage costs are incurred in connection with the delivery. When the May contracts expired on 21 April, there were simply no buyers and anyone who wanted to get rid of a long position not only gave away the oil, but had to pay around USD 38.00 on top of it.

Shortage and short selling

Market participants have had a painful experience that is unlikely to be repeated on May 19, when the June contracts expire. A long squeeze in April could possibly be followed by a short squeeze until the May expiry date. Due to the low oil price, it is not worthwhile for many producers to continue production at normal levels. A throttling leads to a decline in supply.

At the same time, the economy and thus the demand for oil will continue to grow in the coming weeks. Speculators, who at the same time are betting that the oil price will be lower again at the expiry date, could possibly become the price driver with their coverages. Will the price of oil still rise to USD 100.00 per barrel in May? We will see. Most recently, the June contract for WTI was traded at USD 24.59 and has thus already risen by more than 100% compared to the previous week.

Advantage for Canadian oil

The shareholders of BP, Exxon and Shell will again have exciting days ahead of them. Up to the level at the beginning of the year, when the oil price was trading above USD 60.00, these shares will have to increase by 50%. A positive oil price development will also be exciting for the young producer Saturn Oil & Gas from Canada. The company produces the black gold in the province of Saskatchewan.

The deposits are located in the Viking Formation, consisting of sandstone, and can be extracted at less than CAD 15 per barrel more cost-effectively than the shale oil produced by the companies in the USA. This competitive advantage is likely to play into Saturn Oil & Gas' hands in the future. Especially since the management is also focusing on the ESG trend.

Harmless origin of the energy source

Oil will continue to be needed in the future in modern and aspiring society. In this context, the current market conditions can be an excellent opportunity to enter the market. In connection with the topic of sustainability and environmental protection, Canada as a location is likely to gain in importance.

Ethically and morally sound oil will have a competitive advantage in the medium to long term. Anyone who already places value on fair trade and organic farming should question which regime is supported at the fuel pump.


Author

Mario Hose

Born and raised in Hannover, Lower Saxony follows social and economic developments around the globe. As a passionate entrepreneur and columnist he explains and compares the most diverse business models as well as markets for interested stock traders.

About the author



Conflict of interest & risk note

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  • Oil

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  • Oil

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  • Oil

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