Unprecedent times15 Jul 2022 12:34
These days is really anyone guess, what will be the future of world economies and rebalancing of geopolitical powers.
Asset prices are disconnected with supply/demand due to speculations and political interest.
The pandemic and now Ukraine war, imo have changed permanently geopolitics and the way we value assets......possibly for the better.
For those interested in meaningful debate, below is an article that has noting to do with HBR and oil , but at the same time can be a good starting point, in trying to predict how the oil market would be affected by current Macro/Micro disconnect....
https://www.mining.com/web/collapsing-metal-inventories-clash-with-plunging-prices-andy-home/
From this article we can clearly say that the LME is broken, not functioning, not reflecting anymore supply demand.
In my view the exchange was never made/conceived to reflect the true metals market, but more to suit the gambling addictions of many financial institution and players, in the end it bite them back, they have now lost credibility and at the same time, give back the power to the rightful owners ie the metal producers, been country or single companies....
With oil is happening probably the same, bilateral contract of Russian oil/gas are exchanging as we speak, with China, India and who knows maybe also some western entities for the resale at higher price, I wouldn't be surprised...
Oil price coming down is a good thing for the market for oil to find the true value...
One can be excused if not sure what this value is, what is the right POO.
One thig is sure though and that is, unless the world is entering a deep and prolonged recession, it will be difficult to oversupply the energy market and imo POO will reset at higher levels.