Crude oil prices are going back to $100 and then $120 per barrel.
That’s what the portfolio manager of Smead Capital Management told Bloomberg recently. And I think he’s right.
It’s easy to forget that oil hit a 10-year high above $130 a barrel back in March of last year. But economic weakness and recession fears helped walk oil back down from that high.
And then the US government jumped in.
The Biden administration drained the Strategic Petroleum Reserve (SPR) to dump 180 million barrels of oil on the market. This was the largest SPR release in history.
The SPR is simply the US government’s emergency stockpile of crude oil. Congress established it back in 1975 in response to the Arab Oil Embargo which led to shortages across the US.
The current administration drained the SPR to push the price of oil lower. They got it back down into the $70s and $80s. That’s where oil’s traded for most of the year.
But here’s the thing… the rubber band always snaps back. When you push something in a direction it wouldn’t otherwise go in, sooner or later it’s going to come back.
And that’s especially true of oil when you have wars in Eastern Europe and in the Levant… and you have crazy people trying their darndest to escalate those wars into something bigger.
Meanwhile, the Environmental, Social, Governance (ESG) movement shifted nearly $2.2 trillion in investment into renewable energy development. All in just the last seven years.
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