Apologies about the single post this week. Our office has gone to social distancing, meaning we are all spending considerably less time in the office and work remotely from home. This has taken some getting use to since we go to great lengths to protect our client’s non public information, additional steps are required when working off site to authenticate access to that information. On top of home schooling my daughter for the remaining part of the year, the extra time I’ve had has been less than I would like recently.
Most importantly, I’ve also tried to touch base with most of my client’s during this time, which has occupied quite a bit of my in-office time when their files are easiest to access.
I wanted to address the oil situation that occurred earlier this week, as this is the first time in History this event happened. If one didn’t understand the basics of oil, it probably made no sense. ‘How can oil be negative $ 35 a barrel?’ Ill try to keep it simple.
Oil is sold in contracts. Basically they are promissory notes to deliver a certain amount of barrels by a specific date. With oil demand very high ‘Pre-Covid,’ drillers were pulling out as much as they could in order to sell it through these contracts. But Covid crushed oil demand with it’s impact on travel, trade, and the global economy ,so these companies had massive amounts of oil that nobody needs. Because of this very low demand, they have to sell it at a negative (pay somebody) in order to get somebody to take it off their hands since they do not have the storage needed for this oil. How long will this excess continue? And where will the oil be stored with supply well exceeding demand?
If you would like to talk about the long term outlook for oil based on this recent demand crush, or have other questions or concerns regarding investments you’d like to discuss, feel free to give me a call. I’m not sure I’ve ever been so busy between work and my home-life, but I try to always make myself available for clients or readers who’d like to chat.
Phillip Connors Value Financial Advisers, Inc. (303) 770-3030 phillip@valuefin.com
Seeking Value 