Long story short, because of the Corona virus demand in oil has dropped significantly in the last few months. Crude WTI went from around 58/ barrel to approximately 40 as of last Friday.

Initially OPEC and Russia agreed to cut supply to steady the price however Russia no longer wants to cut prices any further. So talks to further cut failed on Friday and now Saudi Arabia is deciding to fuck Russia and is actually going to try to undercut Russian oil prices, especially in Russian export markets.

Crude WTI futures are at 33 dollar a barrel currently. This is important considering we as consumers will benefit from cheaper oil prices but personally i think this is worrisome because this could quickly escalate on the geopolitical front.

Not sure how Russia is going to respond but conceivably they could do something in the middle east considering they have leverage there and could even go as far as supplying Houthis or Iranians with weapons to counter Saudi Arabia. Idk what's going to happen but definitely have my eyes on this.



https://www.wsj.com/articles/saudi-aramco-shares-fall-below-ipo-price-for-first-time-11583663747

This post was edited by ofthevoid on Mar 8 2020 05:28pm

Look i spotted a bad Russian who wanted to keep high prices to sell his dirty oil:



Anything is preferable than destructive tight oil. I think more about Russia trying to keep order in the area.

This post was edited by Saucisson6000 on Mar 8 2020 05:55pm

How come tech goes down with oil dropping?

It's market hysteria over corona. There's actually a ton of companies that directly benefit from this price war. Shipping companies, airlines, pretty much any company that depends on energy as a heavy input.

I bought airline calls Friday. Some of these companies dropped to very cheap valuations. Imagine airlines trading a p/e of 4x and now their key cost is dropping even further. Yeah flights demand are going to drop for Q1 maybe Q2 but i feel like at these levels and with oil being so cheap they have massive upside.

This post was edited by ofthevoid on Mar 8 2020 06:22pm

Yeah I don’t think bear market is over for airlines unfortunately. I load the boat with Boeing at 200

If market really dumps 1000/100 tomorrow to spy 2840 support then I’m going hella long on tech

When oil prices fall, it’s the only time I buy airline stocks. Airlines make or break their EPS goals based on the oil contracts they sign.

Not sure how you guys think its a good idea, flights are the cheapest i have ever seen, some airlines are going under.

I find this interesting because- we're about to watch a huge market crash tomorrow. Possibly 1000-2000+ dow. Maybe dwarfing the previous losses and biggest of all time. And yet, everything is falling relative to a strong us dollar and economy. Mexico, Iran, Russia, China, etc etc all get hammered while the US should see actual benefits. And the Coronavirus has proven to be a nonissue for healthy working aged folks, only deadly to people past retirement age and unlikely to spread widely before the natural tapering off of summer- if anything a bigger issue next winter.

All the conditions are going to be set for a strong US economy against a weak foreign backdrop, and the only threats are that instabilities and hysteria and panic get past a tipping point and implode on themselves or cause a true conflict. Be it investors and speculators crashing the market out of fear, or Russia and Iran seeking to destabilize the KSA and provoke war. And honestly, those scenarios seem more plausible than not.

the big boys are sitting on piles of cash, they can ride it out. then with oil being all fubar right now could mean a good bounce back.

as for smaller airlines yeah, hope people got their puts in already. a few will could easily go under and big boys will feast on them

Russians are saying they can be okay for 6-10 years at oil prices between 25-30 since they have half a trillion in foreign reserves, meanwhile the Saudis need oil prices at around 80/barrel to balance their budget. At this price their deficit would go up to double digits.

So essentially the Saudis are going to go into debt if they want to finance this price war. Seems like both sides are digging in.


https://www.reuters.com/article/us-opec-oil-policies/russia-vs-saudi-how-much-pain-can-they-take-in-oil-price-war-idUSKBN20W21S?feedType=RSS&feedName=businessNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FbusinessNews+%28Business+News%29