 Good day, fellow investors. Welcome to the stock market news with a long-term fundamental twist. And I started to prepare the news, usually on Friday, wanting to discuss oil, the economy, the monetary policies, the budget deficits, the implications of that in the long term, and then an investing strategy where to look for opportunities. I started preparing and then I said, okay, methodically, first make a video on oil and then tomorrow make about economy, monetary, etc. And then even discuss Ray Dalio's recent letter. So let's start with oil today, discussing the price of oil, the long-term implications of the supply and demand. How does that work? Investing opportunities, what are the bets that people are making on oil, the long-term outlook, and then also finish with my investing strategy and my, of course, long-term natural gas stock pick. So let's immediately dig into the content. What is the situation with oil? A few weeks ago I made a video about oil, oil stocks and how oil stocks at current oil levels are a long-term buy. Then over the last two weeks I got hammered in the comments. So I made a good video, the comments, the comments I'm putting here were really bad. If you want to look the ugly, really, really ugly comments then you have to go to look into the comments of the video. But then also what was really ugly over the week were oil prices. So oil prices were down to negative territory minus 47 something. That's insane how you can go from 120 just a few years ago to negative prices. And many wonder how is that possible that we see a commodity like oil seeing negative prices? Well, if you look at the demand and supply curve, this is normal negative prices with commodities like electricity. This is from Germany and in Germany when there is a lot of sun and a lot of wind in a hot summer day, let's say, then there is so much oversupply of electricity with low demand because nobody is using it because everybody is outside enjoying the sun. And then simply because it doesn't pay to stop all those windmills to stop the production of energy, then the electricity price becomes negative and they are selling it for negative prices. Same thing happened with oil. We are now in an oversupply situation. Well, there is no economy, nobody is traveling, nobody is flying, nobody is doing nothing, nobody is using oil as much as it was the case two or three months ago. And therefore simply everybody is still producing because to stop those wells, it costs a lot of capital to create them, to create the necessary pressures and stop producing would be extremely cost would practically mean damaging the well forever at that production cost. We'll later discuss all the cost levels at which it is profitable to produce, invest or have you have to shut down, that we'll discuss a little bit later. So that's what's happening with oil. Plus, there were a lot of margins, there is a lot of trading and we'll also discuss the oil ETF and how there is not just oil in the picture but also financial instrument derivatives, trading speculative bets that create those short-term situations where oil goes down to 35 negative. Interactive brokers issued a statement how there were big losses on oil contracts and margin losses and the consequence is that oil went negative. However, I said in the video two weeks ago, invest in oil stocks. So April 5 oil stocks, Exxon stock for example is up. How can that be that we have seen negative oil prices, oil prices going down and Exxon stock is up? Well, because there is the short-term picture, the short-term bets that people are making and then there is the long-term picture where you price in the cash flows the company is going to make from now till judgment day and that's the valuation of stock. Given that Exxon stock is still good, the market still thinks it will not go bankrupt, the economy will recover in the long-term and things will be as they have been in the past. Also, something very important to understand, oil is traded in many many places and the negative price was in taxes. However, across the world we have different prices from the United Kingdom at 21, this changes on a daily basis, euros 17 and then we had negative prices in taxes. Now they have rebounded to a more global average. So the situation with oil, supply and demand, short-term anything can happen as we have seen with the negative prices. Long-term there are some balances, there are some forces and we have to see how to be positioned to get a nice return from those investments. Let's look at the United States Oil Fund, the ETF that attempts to track the price of West Texas intermediate light sweet crude oil. They attempt to track it because they have some limitations and the limitations have been seen recently. So assets under management have grown from approximately 2 billion to 4.2 billion in the last few months as many retail investors have been betting on higher oil prices in the future and then they read, okay ETF, how can I bet on higher oil prices? Let's buy an ETF that tracks the price of oil and yes, if oil prices go up tomorrow they will make money but it's not that easy, it gets complicated. Similar situation was in 2008 when oil prices went down 2014 and 2004-2015 also a lot of people invested in oil ETF because they hoped for a rebound and now we have seen 1.6 billion inflows but the ETF is disconnected from reality as it can't track the price of oil as it did before. So there is a disconnection because they need to issue new shares to adjust for all the inflows and they are not allowed to issue new shares that fast plus they can only have 25% of the future contracts which means that they have to change their strategy exactly where many, many retail investors are now rushing into the fund because they want to make a bet on oil and then if you look at who's betting on oil, this is the number of users with Robinhood accounts buying the oil ETF. So it's insane, it went from 10,000 a few months ago up to 150,000 so every retail investor using Robinhood is buying oil contracts through the ETF. That's really, really insane because what is an ETF and I bet that of the 150,000 people few went to read the prospect of the ETF and how it works. A lot of people bet on oil prices 2015-2008, there was look a small recovery every time so it's not that it will recover to where it was because it can't simply track and there is always the issue of timing. Nevertheless, all over YouTube everybody is betting on oil, how can we take advantage of the situation? We can double triple our money in the next six to 12 months. We're going to put huge amounts into the hottest bets that everybody is already making and has made it. And then also tanker bet that financial education has been making because oh yes, spot prices for tankers used for storage have exploded but as demand and supply which we will discuss in a moment evens out then tankers will return to the normal situation. And I have made a video about investing in shipping, I think it was a few months ago. What is the situation that and if you are interested into investing in shipping stocks you should watch that video. Now before continuing with demand and supply the short term and the long term all these bets that you make using a buying a tanker buying an ETF that tracks future contracts etc are bets that include timing. I don't know when oil prices will go up, I know that oil prices will likely go up let's say to 50 at some point in time. Will it be in six months? Will it be 12 months, 18, 24 months? I have no idea and actually depends on the situation on how long it will take for all the oil in the storage to flow back into the economy. So when are we going to use that? So when it comes to betting like I'm buying American tankers or I'm buying the oil ETF then you have a big component of your investment or speculation that is timing and if it doesn't happen in six months let's say in six months the oil ETF is 50% down then it goes down again another 25% in nine months then you start thinking okay should I do something else but I already am so much down and so much psychology comes into the game that is that most people become insane when related to such speculative bets and that's also the problem with speculation and therefore I prefer investing. How to find investments that will do okay over the next two, three, four, five, ten years with low risk so that I don't have to worry about the timing component of my investments. If you are a long-term investor this is the channel to subscribe to also click that notification bell and if you like this content please click like or comment for the youtube algorithm thank you. So let's discuss now the demand and supply the short term and the long term outlook for oil. So this is the global liquids capacity 2040 by break events. There are production costs Saudi Arabia 20 per barrel I don't know OPEC onshore Russian Federation 20 to 40 depending on the company Iraq and then you have all this more expensive Canada oil sands oil shale US tight oil etc big productions that have much higher costs from 15 to 60 and then if you put it in a perspective what is the oil consumed over let's say the long term now we are at 100 million barrels per day let's say demand law goes down in 2040 and we are at just 90 still the price of oil to justify the investments should be around 60 because if you want to produce 90 million barrels per day you need to have a higher price of oil in the short term the situation is much different if we were look at world consumption then it is really declining and it probably will look even worse than this from the energy information administration so down what 12 14 percent it could be even worse and that just that change of 12 percent goes into negative oil prices because that's the impact and it's not that easy to stop production and production has been going down a little bit will continue to go down likely but as there is no economy until it rebounds we will see same similar situation with oil will it rebound in three months will it rebound in 12 months once nobody knows I don't know and I'm not taking those bets however long term this is the key demand and supply so supply you need capital investments you need to invest a lot of money to find those oil wells produce increase productions explore for new oil fields etc and as we see in 2014 production investments in new production has been extremely high especially offshore and now those offshore's well wells are drying up but the low prices are really deferring investments Exxon said they will cut investments by 30 percent Petronas shuts down 14 projects so it's very interesting how demand drives also supply but it's disconnected from a time basis so the lower amount of investments means less oil in the future which means higher oil prices and if we look at the break even prices to supply what is needed over the long term we are still well above 50 just to look at the US wells they really need 50 to attract investors to profitably drill a new well however also not to shut down wells in the Permian they will not shut down if the price longer term is around 27 but we are at 30 45 40 dollars a barrel not to shut down not to close permanently the well it's extremely costly a lot of money has gone into that but that's the situation with all and it's likely that long term when the supply demand stabilizes again we'll again see good oil prices between 40 and 60 and again volatile as oil prices are always volatile and when it comes to investments this is very interesting at 50 dollars a barrel depending on where you invest it takes 12 10 years to get your return back which is a long commitment in volatile oil markets at 70 dollars still a little bit less but it's hard now to convince investors to invest in offshore deep water or shelf to get their money back maybe in seven to eight years so if these projects fall into the water then we'll see likely when things stabilize and demand and supply comes back to normal we'll see again higher oil prices even the forecast here is this consumption will be higher than production for a while and that's very very interesting for long term investors and then if you look at things the current situation oversupply we have a clear content go so if you look this is natural gas prices if you look at the price immediately it's very very low but if you go lower longer then it goes again up which means okay now it's clear that there is oversupply and therefore nobody wants to take off the oil or the gas but longer term they know again it will supply and that's why prices are higher and that's where everybody is betting okay if i buy now and sell later and storage it there is my arbitrage you are not a professional trader so you cannot arbitrage therefore you need to time things that you buy something now and you can sell it later at a higher price but if the timing is not correct if these lower prices persist over the long term then you will not get a reward for that maybe you will sell in seven months and in the eighth month it will boom up but that's speculating and that's what you have to keep in mind when you speculate on investments or oil related derivatives long term some producers with it will go bust already happening exploration companies are really out of money now nobody wants to invest there that means that there will be less supply demand will likely ramp up slowly and then we'll have again balanced oil prices for a while oil prices either shoot up or go down the long term balance is what you have to look at and that we have shown with the cost curves plus over the very long term let me do my thing with the very long term the global middle class is expected to grow from 3.5 billion now to more than 5 billion people using a car using oil if they don't go electric but that again depends that's why i prefer natural gas if they go electric they'll produce electricity with natural gas so i'm still fine also energy demand likely with this crisis or not to grow significantly over the next uh decades as the world improves as the world grows and then also depending on situation we don't know whether uh oil will have such a high component with energy will it be growing will not be growing doesn't really matter what i know what i do over the long term i buy businesses i'm not buying royal dot shell because i'm not directly invested in oil but i buy businesses that will likely still produce over the long term let's say exon royal dot shell i lie i prefer russian so so i'm personally invested in guts from natural gas if those wealth in the united states dry up are closed down less demand much less supply of natural gas which is a byproduct there which means natural gas prices will go up the companies i own unlikely to go bankrupt because of the extremely low production costs which is okay maybe the dividend will be lower one year but in the next one two three four five years the dividend will go higher and here like all other youtubes i think i can double my money over the next five years perhaps it will happen in three perhaps it will happen in seven but i'm okay with that in the meantime i'll be getting a nice dividend so no doubling my money in six months with me but long term that is always the goal so my message is simple invest in what will survive no matter what oil prices will go up and down when those are up you get a great dividend stocks will likely go up when those are down you'll get a smaller dividend and stock likely go down you can buy more that's it that's investing so if you're an investor please subscribe click the notification bell click like for the youtube algorithm check everything that i do if you want to know more about me about my research charity we are donating the proceeds from youtube here my book a free stock market investment course also you have the link of everything in the description of the video on youtube i'm looking forward to comments thank you and i'll see you in the next video