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Cathie Wood calls for lower oil prices, equating the crude market with the extinction of whale oil in the early 1900s.
“The rise in oil prices this year is more a function of supply than demand. At the turn of the 20th century, whale oil suffered the same fate and the prices of whale oil fluctuated considerably. Yes @ARKInvestresearch is correct, oil prices will suffer the same fate as whale oil prices, ”Wood said in a tweet Thursday night.
The price of US oil has risen sharply this year as demand recovers after falling during the pandemic. US West Texas Intermediate (WTI) crude futures were at around $ 74.38 a barrel on Friday, on track to post its sixth straight week of gains. Commodity rose more than 53% in 2021. At some point in the onset of the pandemic, futures contracts traded at negative value due to the collapse in demand.
While many analysts and economists view the rise in oil prices as a function of increasing demand, Wood postulates that it is due to a disruption in supply. The innovation investor expects oil prices to fall just like in the early 1900s, when whale oil prices significantly lost value as other fuel sources replaced it.
Many of Wood’s most convinced companies surround technologies that bypass the use of petroleum. Wood is a bull on electric vehicles and battery-related businesses. Overall, the widely followed investor believes long-term deflation will return as technology continues to disrupt many industries across the board.
“That said, based on ESG mandates, pension funds are demanding that oil companies cut capital spending while US banks, in response to the collapse in oil prices last year, are denying companies to fracking loans for capital spending, and OPEC keeps the line on supply, ”Wood tweeted.
Meanwhile, the Organization of the Petroleum Exporting Countries, or OPEC, said earlier this week that it believes demand for oil will continue to grow through 2035, even with cleaner energy sources developed then. that developing countries increase fuel use. OPEC then expects demand to level off.
– with reporting from CNBC’s Pippa Stevens.
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