What's Baked Into The Oil Price? (w/ AK)

Oil is one of the most important commodities to the global economy, but the oil price doesn’t always move with markets. This week, AK and a string of experts run down the crucial factors to the price of oil and discuss why oil could be poised for a volatile future.

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What's Baked Into The Oil Price? (w/ AK)

Transcript:
Here in Real Vision, we love looking at asset prices and discussing valuations and bubbles. Now,
there's a few assets that seem to march to the beat of their own drop. And one of those assets is oil. For
some reason, oil doesn't move like stocks or bonds do. Like last week, we talked about trade wars, which
has led to a trillion dollars in equity losses worldwide. But what does oil do in the same period? Well, it
actually traded up. So, today, we're going to look at the price of oil and what affects it in both the short
and the long run. And it's all going down on this week's episode of Real Vision's The One Thing.
What's going on, investors? AK here. Whether it be geopolitical considerations or supply demand
dynamics, oil is central to the global market. Now, of course, the media loves to oversimplify things, and
oil is no exception. You will often hear the Saudis and their OPEC cartel raise the price of oil. But that's not
reality. While the Saudis and OPEC do a player role in the price of oil, they're just one component of the
whole picture that affects it.
According to the US Energy Information Administration, for the first time ever, the US produced the most
crude oil in the world in 2018. So, as the control over the production of oil has become more fragmented,
the factors that affect oil prices have become more complicated. So, Real Vision invited Diego Parrilla to
discuss that fragmentation and how it's affected the oil price.

[tibsyy]

Love your videos AK on Fallible channel as well!

[finranarc]

Neglecting influences of central bank, rates, currency, QE/QT, etc intertwined with crude supply & demand shocks involving many agents. Go chop that crude chart on SPX vs Crude from late 2015 onward & tell me there’s not any correlation — emphasis on large corrections. Fed has even recently acknowledged the impact of crude on their decisions. Possible that there is a convergence / divergence cycle connected to central bank action(s). Crude is such a large input factor in economy I feel its naive to discredit its impact on stock market & firm earnings (not to mention leverage risk to banking sector related to pricing). We were in vastly different stages in economy from ‘09-‘14 compared to current stage in our economy — think consumption, inflation, sentiment, credit. Could rant about this forever, but will stop there.