Oil Hits New Low of the Year at $55 a Barrel

Bloomberg

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00:00Mike, you said it was going to go down maybe to $40,000 as a matter of fact,

00:03and I'm wondering if you can remind us of the trends that we're seeing here,

00:05because this is supposed to be winter season. Isn't oil more expensive?

00:09Yeah, it's nice to get a few right.

00:11Well, if you want to talk about winter season,

00:13natural gas has absolutely collapsed from where it was just three weeks ago.

00:16It was up 40% in the year, and that's only 5%.

00:19It was tilted over like you started with crude oil.

00:23$55 a barrel, just made a new low for the year today.

00:26I think it's more likely to be towards 40 next year than above 70.

00:30That's just a trend of oversupply and superabundance,

00:33and the key thing to get it much lower, Joe,

00:36is just a little bit of what people would call a healthy correction in the stock market,

00:40which might have started.

00:42What does oversupply and healthy abundance mean for drill baby drill in the new year?

00:48Well, that's the significance. It's not just crude oil.

00:51It's natural gas. It's corn. It's soybeans. It's wheat. It's the whole space,

00:54and that's the timing of Mr. Trump's presidency.

00:57He came in at a perfect time to say these kind of things and have them happen

01:00just because we had that big spike up to the peak in 2022.

01:04That brought in all the supply.

01:05It kicked in the technology and shifted over to EVs,

01:08and now they're heading lower.

01:10So superabundance is just a great book I read,

01:13and I enjoy what the proponent of it shows,

01:16that when you have humans like us who create more with less every day,

01:21you want to embrace that technology, but not the price.

01:25And the price continues to decline in crude oils, corn, soybeans, wheat, natural gas,

01:30and I don't know what stops it other than lower prices.

01:33Looking at the, understood.

01:35AAA's got the national average at $2.90 right now,

01:38so we are decidedly below $3.

01:41Where's the president seeing $1.99 or lower? Is that real?

01:45Well, they can see that in some places.

01:47I've heard anecdotal, but I think the national average price at $2.90

01:52is going to head towards $2 by this time next year.

01:55And a key catalyst for that, Joe, is, you know,

01:58we haven't had a down year for the S&P 500 total return.

02:01We've only had two since 2008.

02:03Maybe we're due for a little bit of that,

02:04and that's every single time that gas has got to above four,

02:08got to five two couple years ago, it's always bottomed there too.

02:11And I ask myself, what stops that?

02:13To me, it's accelerating.

02:14And now the U.S. is a net exporter of crude oil, liquid fuels, natural gas.

02:19We're just a net exporter of almost most of those commodities we really need,

02:23which means we're dependent on exports.

02:24So it's a good sign that prices will all go down.

02:28But it's also the classic example of post-inflation deflation.

02:32And the question is, how long can that stay away from things like the stock market?

02:36Because it certainly is hitting cryptocurrencies.

02:38Boy, it sure is.

02:39And I guess I need to ask you about that.

02:41It is remarkable, by the way.

02:42I'm going to be talking to Jane Harman in just a moment, Mike McGlone,

02:44that all the saber rattling down around Venezuela is doing nothing to elevate the price of oil.

02:49But I guess that tells us a lot about Venezuela's contribution to your points earlier.

02:54What's Bitcoin doing?

02:55It's one of the only green things on the screen.

02:56Is this just a little bit of bottom fishing here or something else going on?

03:00The biggest rallies typically happen in bear markets.

03:03And Bitcoin and cryptos are clearly in a bear market.

03:06The Bloomberg Galaxy Crypto Index is now down about 20% in the year.

03:10It was up over 20%.

03:12That wasn't supposed to happen.

03:14Bitcoin is down about 6% in the year.

03:16It was up about 30% in the year.

03:17But it put in a key peak top that I think is going to resonate for a long time.

03:22So I think Bitcoin is going to head initially towards $50,000.

03:25I don't know what makes it go higher.

03:27But the key thing is it's the leading indicator factor, Joe, that I really think that's the matter.

03:31I mean, it's the tip of the iceberg of risk assets.

03:33And it's heading downward.

03:35I think it's the de-risking that's probably hitting the stock market today that might continue into year end.

03:40So I'm really worried that this is all going to trickle down into the stock market as we head to year end.

03:44And by the way, S&P 500 did drop about 5% in the last couple weeks of 2024.

03:48But it had a lot of good things to look forward to.

03:50Now everything it's looking forward to is rolling over, particularly crypto.

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