Oil markets seeing a brighter future

by Jan 12, 2021Market Reviews

Oil markets seeing a brighter future

24th February 2020 was when the last time we saw oil hovering around the $55.80 mark. The Oil markets were hammered in 2020, taking investors and traders back to their economics 101 classes.

However, unlike traditional markets, the Oil markets have something traditional markets do not – controlled supply.

24th February 2020 was when Brent was last at this price level

OPEC+ controlling the supply of Oil

OPEC+, a 24- country cartel, took drastic measures as of late to control the drop in oil price by restricting supply. The most recent supply cut by 1 million barrels a day by Saudi Arabia has pushed Oil markets to levels not seen since 24th February last year. Saudi’s unexpected move was on the back of the OPEC+ decision to gradually bring back supply to the market in January.

 

However, the de-facto leader claims the Oil market throne

The Energy Minister of the Oil-dependent country, Prince Abdulaziz bin Salman stated that “[Saudi Arabia] are the guardian of the [Oil] industry”, showing their influence in the Oil markets.

 

Oil markets getting bullish recommendations from institutions

Since December, Oil prices have rebounded 18% on the vaccine’s slow rollout, peaking at around $56 a barrel. With the rollout of Vaccinations, analysts at Goldman Sachs are becoming bullish on the Black Gold, stating that they predict Brent could rise to $65 a barrel by the summer of this year, bringing the timeline half a year from their previous prediction. However, they stated that “given the magnitude of the recent rally, however, markets are likely to consolidate near-term,”

Given the Coronavirus situation worldwide, the demand situation has not improved to the point where it was on the 24th February, giving the price of oil the characteristic of a forward-looking stock instead of a spot looking commodity.  However, if the vaccine continues to make its way around the world and demand truly starts picking up, we may see the Oil markets return back to a relative norm.

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Stocks coming into 2021 – Boom or Bust?

Stocks coming into 2021 – Boom or Bust?

Stocks coming into 2021 – Boom or Bust?

Here are two fun facts from equities in 2020.

· The NASDAQ returned 46% from the start of 2020. If you purchased at the peak of the recessionary period in mid-March, you would’ve made a return on investment of 85%.
· Meanwhile, the S&P500 only returned 17% from the start of 2020.
· The average price/earnings ratio for stocks in the NASDAQ was pushing 23
· The best performing stock that is in the S&P 500 and NASDAQ was Tesla, providing a 743% Return.

With that in mind, what are we expecting for stocks coming into 2021?

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