In our last review of oil markets and impacts on energy producers (view here), we provided arguments for both the bull and bear thesis. It is a few months later and we are now witnessing the bear thesis play out given the level of turbulence in today’s market.
Looking ahead to 2020, we have little confidence that oil prices will be any better than they are today. That may be a best-case scenario given the level of turbulence in the markets today and likely looking out to the remainder of 2019. Oil prices have dropped 8% in a single day, purely based on a tweet, suggesting that fundamentals currently have little bearing on the movement, either up or down, on oil prices. The trade war with China could quite conceivably linger on until after the next presidential election; oil demand growth at its lowest level since 2008 and likely to continue to slide. Growth projections for significant world economies looking gloomier by the day, add the uncertainty around a “hard” Brexit, and it all adds up to a whole heap of uncertainty.